Slide 1

11th ACG Cross Training Seminar11th ACG Cross Training Seminar

3rd & 4th July 20093rd & 4th July 2009

Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used orreproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor thePresenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used orreproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor thePresenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.

It is your responsibility to verify any information before using or relying on it.It is your responsibility to verify any information before using or relying on it.

Depository ModelDepository Model

AGENDA

IntroductionIntroduction

Legal FrameworkLegal Framework

Duties of Bursa Malaysia DepositoryDuties of Bursa Malaysia Depository

CDS UsersCDS Users

Account StructureAccount Structure

Difference Between Direct & Indirect CDS AccountDifference Between Direct & Indirect CDS Account

Merits For Direct & Indirect CDS AccountMerits For Direct & Indirect CDS Account

Demerits of Direct & Indirect CDS AccountDemerits of Direct & Indirect CDS Account

Depositories ServicesDepositories Services

Page 2

DEPOSITORY MODEL

INTRODUCTION

Bursa Malaysia Depository Sdn Bhd was established in April 1990and commenced operations in November 1992

Wholly-owned subsidiary of Bursa Malaysia Berhad

Authorised capital of RM50 million and paid up capital of RM25million

Completed immobilization of all equities & non-equities securitieslisted on the stock exchange in June 1997

Page 3

DEPOSITORY MODEL

LEGAL FRAMEWORK

 Securities Industry (Central Depositories) Act 1991 {SICDA}.

SICDA empowers the Central Depository to draw up the rules

of Bursa Malaysia Depository and the issuance of any directions.

Bursa Malaysia Depository Nominess Sdn Bhd is deemed as abare trustee

Share registrar to issue certificate in the name of Bursa MalaysiaDepository Nominees Sdn Bhd

Undeposited securities not to be traded on stock exchange orutilised to settle market trade

Page 4

DEPOSITORY MODEL

SALIENT FEATURES IN CDS

Account maintained at client level and must be under thename of beneficial owner or Authorised Nominees name.Account maintained at client level and must be under thename of beneficial owner or Authorised Nominees name.

Account are tagged with Stock Broker where the account wasopenedAccount are tagged with Stock Broker where the account wasopened

Mandatory deposit - 100% immobilisation rateMandatory deposit - 100% immobilisation rate

Transfer of Securities within the “Approved Reasons toTransfer”Transfer of Securities within the “Approved Reasons toTransfer”

No Withdrawal of securitiesNo Withdrawal of securities

Page 5

DEPOSITORY MODEL

CDS USERS

Provides depository services to the following users through theCentral Depository System (CDS):-

Authorised Depository Agent (ADA)

Authorised Direct Member (ADM)

Issuer

Issuing house

Share registrar

Account holder / depositor

Clearing House

Page 6

DEPOSITORY MODEL

CDS USERS

Page 7

DEPOSITORY MODEL

Bursa MalaysiaBursa Malaysia

Securities BerhadSecurities Berhad

Bursa Malaysia SecuritiesClearing BerhadBursa Malaysia SecuritiesClearing Berhad

• Record of Depositors• Record of Depositors

• Corporate Exercise• Corporate Exercise

• Allotment Details• Allotment Details

• Certificate in the name of Bursa Malaysia DepositoryNominees Sdn Bhd• Certificate in the name of Bursa Malaysia DepositoryNominees Sdn Bhd

Page 8

ACCOUNT STRUCTURE

Direct Account :

held directly in the name of individual, corporate body, institutionalinvestors and etc.

Indirect Account :

held in the name of nominees where the beneficial owner details arecaptured

one nominee account one beneficial owner

nominees account can only be opened by Authorised Nominees i.e.bank/ broker/trust companies

Certain relaxation was introduced whereby nominee company canoperate omnibus account effective 21 October 2005.

DEPOSITORY MODEL

Page 9

Direct Account

Indirect Account

Account holder open the account withthe Brokers i.e. ADA under his namedirectly

i.e.

John Smith

Depositor open the account withCustodians Bank or Brokers under thename of a nominee company with thedepositors as the beneficial owner

i.e.

ABC Nominees (Tempatan) Sdn Bhd

For John Smith

In direct account, the account holder isthe owner of the securities in the CDSaccount. The depositor will beregistered as the shareholder

In indirect account, the nomineecompany is the owner of the securitiesin the CDS account. The name of thenominee company will be registered asthe shareholder.

DIFFERENCES BETWEEN

DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

Page 10

Direct Account

Indirect Account

Dividend entitlement will be directlymailed to the depositor, whileentitlement in shares will be crediteddirectly to the account

Dividend entitlement will be receivedby the nominee company that in turnwill redirect these entitlement to thebeneficial owner

Account opened for its own investmentand deal with securities using thisdirect account

Account opened for the followingpurpose :

1. custodian

2. margin or loan facilities purpose

Requires supporting documents foropening of direct CDS account

Does not require extensive supportingdocument

The depositor is the operator of theaccount

The nominee company is the operatorof the account

DIFFERENCES BETWEEN

DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

Page 11

Direct Account

Indirect Account

•Depositors are in a principalrelationship with Bursa Depository

•Confidentiality of depositorshareholdings is protected wherebydepositor’s share holding is notknown to third party

•The ownership of CDS account istransparent

•The asset of depositor andstockbroker i.e. ADA is clearlysegregated

•Depositor received his/her annualreports or dividends payout directlyfrom the registrar/issuer

•Lesser documentation to operatedsuch account

•Do not require to be present inperson to perform depositorytransactions

•Cost savings to Bursa Depositoryarising from the following :

- storage cost due to lessdocumentation to stored

- postage and other relatedstationeries on mailing ofstatements/notices as thesenotifications are send electronicallyto nominee company

MERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

Page 12

Direct Account

Indirect Account

•The depositors shareholdings isunaffected in the event the brokersis declared bankrupt

•Depositors received notificationdirectly from Bursa Depository in theevent of any changes to its accountparticulars or movement ofsecurities

•CDS statement of account areissued directly to the depositor

MERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

Page 13

Direct Account

Indirect Account

•More documentation to operate suchaccount

•To be physically present in person toperform depository relatedtransactions

•Higher operational and maintenancecost for Bursa Depository :

- storage cost for storing documents

- postage and stationeries cost forsending out statements and noticesto depositors

•The nominee company is in aprincipal relationship with BursaDepository and the beneficial ownerdetails are merely for information

•Depositor shareholding is known tothird party

•Depositor do not receive anynotification or CDS statement ofaccount directly from BursaDepository

•Delay in receiving dividendentitlement

•Does not receive notification orannual report directly from the Issuer

DEMERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

Page 14

Direct Account

Indirect Account

•Incurred additional cost for servicesprovided by the nominee company•Incurred additional cost for servicesprovided by the nominee company

•Implication to depositorshareholdings if the nomineecompany is declared bankrupt•Implication to depositorshareholdings if the nomineecompany is declared bankrupt

•Ownership of account is not veryclear.•Ownership of account is not veryclear.

DEMERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

DEPOSITORY’S SERVICES

Core services provided are as follows:-

Account openings

Deposit of securities

Transfer of securities

Withdrawal of securities

Initial Public Offerings (IPOs)

Corporate exercises

Page 15

DEPOSITORY MODEL

THANK YOUTHANK YOU

DEPOSITORY MODEL

If you need further information or clarification

please contact the following:

Zailan Azhar Baharin

Bursa Malaysia Berhad

2nd Floor, Exchange Square

Bukit Kewangan

50200 Kuala Lumpur

Tel: 603-2034 7750

Email: zailan@bursamalaysia.com

Website : www.bursamalaysia.com

DEPOSITORY’S SERVICES

Opening of Individual & CorporateCDS Accounts

DEPOSITORY MODEL

Account Management

Balance Enquiry , Enquiry by Name, Enquiry by investor’s IDBalance Enquiry , Enquiry by Name, Enquiry by investor’s ID

Updating of CDS Account ParticularsUpdating of CDS Account Particulars

Suspension/Release Suspension of Account, particular stock orcertain balances in CDS accountSuspension/Release Suspension of Account, particular stock orcertain balances in CDS account

Closing of AccountClosing of Account

Consolidation of Statement of AccountConsolidation of Statement of Account

Inactive / Dormant AccountInactive / Dormant Account

Ad-hoc Statement of Account / Monthly StatementAd-hoc Statement of Account / Monthly Statement

End of Day Processing will generate notices to be mailed to therelevant depositor on changes to their account particulars /suspension/release suspension / changes in their account statusEnd of Day Processing will generate notices to be mailed to therelevant depositor on changes to their account particulars /suspension/release suspension / changes in their account status

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

DEPOSITORY’S SERVICES

Deposit – Acceptance and Rejection

DEPOSITOR

DEPOSITORY MODEL

Deposit of Securities

Provisional credit is accorded on deposit day itselfProvisional credit is accorded on deposit day itself

Depositor able to utilise the provisional credit for trade settlementduring prescribed period of 1 monthDepositor able to utilise the provisional credit for trade settlementduring prescribed period of 1 month

Registrar will authenticate the certificate deposited and revert toDepository within 7 market daysRegistrar will authenticate the certificate deposited and revert toDepository within 7 market days

End of Day processing will generate notices to depositor in eventany deposit is rejectedEnd of Day processing will generate notices to depositor in eventany deposit is rejected

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

DEPOSITORY’S SERVICES

DEPOSITOR

Transfer – Acceptance and Rejection

DEPOSITORY MODEL

Transfer of Securities

Transfer of securities is real timeTransfer of securities is real time

Transfer must be within the “Approved Reasons for Transfer”Transfer must be within the “Approved Reasons for Transfer”

Exception reports are generated to monitor transfer in CDSException reports are generated to monitor transfer in CDS

End of Day Processing will generate notices to the relevant transferor’sand transferee’sEnd of Day Processing will generate notices to the relevant transferor’sand transferee’s

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Withdrawal of Securities

DEPOSITOR

ADA

Registrar

Withdrawal request

Ack.

Document

Confirmation

Registration

Confirm/

Reject

Withdrawal Notice from

Bursa Malaysia Depository Sdn Bhd

Deliver Certificate in depositor’s name

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Withdrawal of Securities

Only permitted for “Delisted” securitiesOnly permitted for “Delisted” securities

Certificate will be issued and mail directly to the depositor within 14market days by the share registrarCertificate will be issued and mail directly to the depositor within 14market days by the share registrar

End of processing will generate notices to the relevant depositors on thesuccessful withdrawal requestEnd of processing will generate notices to the relevant depositors on thesuccessful withdrawal request

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Initial Public Offerings (IPOs)

APPLICANT

ISSUINGHOUSE

BURSADEPOSITORY

Submitapplication

yes

confirmation

mail notice of allotment tosuccessful applicant

Submit detail ofsuccessful applicant

Verify details

Credit theapplicant’sCDS account

Rectify &Resubmit

ISSUINGHOUSE

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Initial Public Offerings (IPOs)

Mandatory to have a CDS account to participate in Initial Public OfferingsMandatory to have a CDS account to participate in Initial Public Offerings

Apply an IPO by completing the prescribed Application Form or via“Electronic Share Application” (ESA) or via Internet ApplicationApply an IPO by completing the prescribed Application Form or via“Electronic Share Application” (ESA) or via Internet Application

ESA able to apply via Automated Teller machineESA able to apply via Automated Teller machine

CDS account of successful applicant will be credited 2 market daysbefore listingCDS account of successful applicant will be credited 2 market daysbefore listing

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Corporate Action

SHAREREGISTRAR

BURSADEPOSITORY

Provide ROD

yes

confirmation

mail notice of allotment tosuccessful applicant

will mail entitlement

i.e. dividend

Verify details

Rectify &Resubmit

SHAREHOLDERACCOUNT HOLDER

Credit into CDSaccount

for entitlement in shares i.e.Bonus/Rights, submit details toBursa Depository

SHAREREGISTRAR

DEPOSITORY’S SERVICES

DEPOSITORY MODEL

Corporate Action

Bursa Depository provide Record of Depositors (ROD) as at bookclosure date of a corporate action to issuer/share registrar to ascertainthe entitlement to be distributedBursa Depository provide Record of Depositors (ROD) as at bookclosure date of a corporate action to issuer/share registrar to ascertainthe entitlement to be distributed

All entitlement in shares to be credited to the depositors accountAll entitlement in shares to be credited to the depositors account

Dividend is distributed to share holder by the registrar/issuer by mailingto them or crediting their bank accountDividend is distributed to share holder by the registrar/issuer by mailingto them or crediting their bank account

DEPOSITORY’S SERVICES

DEPOSITORY MODEL