Central Securities Depository - AbsoluteAstronomy.com

A Central Securities Depository (CSD) is an organization holding securities either in certificated or uncertificated (dematerialized) form, to enable book entry

Book entry

Book entry is a system of tracking ownership of securities where no certificate is given to investors. In the case of book-entry-only issues, while investors do not receive certificates, a custodian holds one or more global certificates...

transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing

Clearing (finance)

In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction....

and settlement

Settlement (finance)

Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades....

of securities. The physical securities may be immobilised by the depository, or securities may be dematerialised (so that they exist only as electronic records).

International Central Securities Depository (ICSD) is a central securities depository that settles trades in international securities and in various domestic securities, usually through direct or indirect (through local agents) links to local CSDs. ClearStream International (earlier Cedel), Euroclear

Euroclear

Euroclear is a user owned and governed Brussels, Belgium based financial services company that specializes in the settlement of securities transactions as well as the safekeeping and asset servicing of these securities. It was founded in 1968 as part of J.P...

and SIX SIS are considered ICSDs. While some view The Depository Trust Company (DTC) as a national CSD rather than an ICSD, in fact DTC -- the largest depository in the world -- holds over $2 trillion in non-US securities and in American Depository Receipts from over 100 nations.

Functions

Safekeeping Securities may be in dematerialized form, book-entry only form (with one or more "global" certificates), or in physical form immobilized within the CSD.
Deposit and Withdrawal Supporting deposits and withdrawals involves the relationship between the transfer agent and/or issuers and the CSD. It also covers the CSD's role within the underwriting
Underwriting
Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products . The name derives from the Lloyd's of London insurance market...

process or listing of new issues in a market.
Dividend, interest, and principal processing, as well as corporate actions including proxy voting Paying and transfer agents, as well as issuers are involved in these processes, depending on the level of services provided by the CSD and its relationship with these entities.
Other services CSDs offer additional services aside from those considered core services. These services include Securities Lending and Borrowing, Matching, and Repo
Repurchase agreement
A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively...

Settlement
Pledge - Central depositories provide pledging of share and securities. Every country require to provide legal framework to protect the interest of the pledgor and pledgee.

However, there are risks and responsibilities regarding these services that must be taken into consideration in analyzing and evaluating each market on a case-by-case basis.

External links

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