Published on: September 1, 2021

CENTRAL SECURITIES DEPOSITORIES

CENTRAL SECURITIES DEPOSITORIES

Karakol 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

buy priligy priligy 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