Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Yes, it is directly answerable to the shareholders of the depository which consist of the Stock Exchanges, registrars, custodians, and brokers. The last two being the depository users as well. The board is also responsible for establishing matters of the policy for the depository, including the determination of fees structure and rebates for participants. In addition, the board reviews and defines Participants admission criteria as well as the terms and conditions for participants.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	Each share of KSEI bears one vote. Hence, the voting position is dependable on the percentage of ownership. Currently, custodian banks is the largest sector, or 45% of ownership. There is a directive from Bapepam that no single party can hold more than 10% of shares on KSEI although presently there is a single shareholder holding 16% of shares resulting from a merger.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	No, there is no cross subsidisation of products. C-BEST is operated by KSEI in its own name and therefore the participants take no credit, operational and other risk on KSEI.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	The board assigns certain responsibilities to four standing committees, namely: Internal Control, Business, Rule & Regulation, and Budget. These committees represent the shareholders by providing suggestion and input to the board for the interest of the shareholders and the participants.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	The board holds meeting with the committee on a monthly basis. Special meeting shall be convened as situation dictates and/or upon request of one committee member. The committee advises KSEI board on special issues that require detailed analysis while contributing to the decision making process over urgent matters that arise between scheduled shareholders meetings.