What is in news : The Reserve Bank of India (RBI) is planning to enable international settlement of transactions in government securities (G-secs) through International Central Securities Depositories (ICSDs), to help expand the investor base for the G-secs market

Details :

A CENTRAL SECURITIES DEPOSITORY (CSD)

• Financial organisation
• Specialises in holding securities
• May be for a specific type of security(such as government bonds).
• Either certificated or uncertificated
• Ownership can be easily transferred electronically without the need for physical certificates.
• Brokers and financial companies can hold their securities at a single location for clearing and settlement.

NATIONAL CENTRAL SECURITIES DEPOSITORY (CSD):

• Many countries have one domestic CSD that is traditionally associated with the national stock exchange.
• Regulated by the government
• Sometimes be separate from the security trading exchanges.

INTERNATIONAL CENTRAL SECURITIES DEPOSITORY (ICSD)

• Settles trades in international securities such as eurobonds
• Also settle trades in various domestic securities, either directly or through local agents.
• International CSDs include Clearstream, Euroclear and SIX SIS.

FUNCTIONS OF CSD:

• Safekeeping Securities may be in de-materialised (uncertificated) form, book-entry only form (with one or more ‘global’ certificates), or in physical form immobilised within the CSD.
• Support deposits and withdrawals
• Dividend, interest, and principal processing, as well as corporate actions including proxy voting.
• Provide securities lending and borrowing, matching, and repurchase agreement, or ISIN assistance.
• Provide pledging of share and securities. Every country is required to provide a legal framework to protect the interest of the pledger and pledgee