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?	No, however, users of all types (except for issuers) have a representative on the board of directors. In addition, the Commission for the Supervision of Companies and Securities supervises the activities of CAVALI and the services it provides to its users.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	With the exception of securities exchanges, which may hold up to 20% of paid-up capital, no other entity may be the direct or indirect holder of more than 5% of the paid-up capital. According to law, the board of directors must always include representatives of minority shareholders.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	There isn't any type of product subsidisation. All fees are determined by a cost analysis, which is approved by the Commission. However, the Commission approves the ceiling with regard to the fees which can be charged; so therefore, CAVALI can charge less.
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)?	Shareholders currently involve only participants, the stock exchange and a few banks most of which have a representative in the depository's board of directors. Law and regulations require that each class of participants must have at least one representative in the board, therefore that provides direct contact with the stakeholders. The depository's by-laws require a board meeting at least once a month. In practice, there are around twenty board meetings per year.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	It is done through circular letters and other written communication.