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?	The Board of Directors comprises of representatives of various institutions who are also users of the system and are indirectly responsible to the users. However, no formal requirement exists whether legal or otherwise. The shareholders of the depository comprise of the stock exchanges and financial institutions that also act in their capacity as participants of the CDC. The existing ownership structure, therefore, facilitates greater harmony between the interests of the end users and the Board of Directors (BOD) of the CDC. Further, the SECP has also placed certain restrictions on the composition of the BOD of the CDC to prevent any single group (brokers etc) to exercise undue influence on the affairs of the CDC.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	The three stock exchanges in Pakistan collectively hold 52.3% of total shareholding with the Karachi Stock Exchange (KSE) having the largest share 40%.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	No, not as such. All Participants pay as per their usage of the system. Moreover, Issuers also pay annual fee.
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)?	Customer feedback through customer support desk located at each office in three cities of Pakistan. The stakeholders mostly have direct representation in the BOD of the CDC allowing them to exercise greater influence on the management to address the needs of its stakeholders. The SECP (regulator) has made provisions to ensure adequate representation for small investors.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	Through letters, circulars and newletters, so far, this has worked well.