Individual investors who seek to trade securities in ADSM or DFM need to maintain a direct securities account with CSD and a trading account with an accredited Broker. The sections below outline the requisite steps. growth.
1)ISSUANCE OF AN INVESTOR IDENTIFICATION NUMBER
An individual or a corporate investor who wishes to trade securities in ADSM or DFM will need to acquire a unique identification number called Investor Number (IN). It may be obtained through the ADSM or DFM Investor Help Desk or through its accredited Brokers. Its' issuance triggers automatically the creation of an Investor Account for the custody of shares traded in the market.
This IN will be quoted in all correspondence, forms and instructions. It identifies the investor account at the Clearing and Depository System (CSD), used to transfer share to and from the account each time the investor buys or sells shares.
The required documents are:
A. Copy of Family Registration Book.
B. Completed (IN) application form.
Provided that all the procedures have been followed, ADSM and DFM will issue an IN card containing the Investor Number. This will be either delivered by mail, collected personally or through the broker, according to the investor's wish. The IN Application form is available at the ADSM and DFM Investor Help Desk or through any Accredited Broker.
2)INVESTOR ACCOUNT WITHIN THE CSD
Investor share certificate deposits, new allotted issues, or Bonus / Right issues will be credited to the Investor Account within CSD. When the investor intends to sell shares, he/she is required to transfer the quantities of shares to his/her broker trading account; however, none of the Brokers have access to Investor Account at CSD.
3)SHARE CERTIFICATES DEPOSITS AND DEMATERIALIZATION
Shares are traditionally held in physical or paper form. This method has its own inherent weaknesses like loss/theft of certificates, forged/fake certificates, cumbersome and time consuming procedure for transfer of shares etc. Therefore, to eliminate these weaknesses, the Securities Market has made it compulsory that trades in all listed securities should be settled in dematerialized form (electronic form).
The existing physical securities, which are the Securities Market depository eligible, are dematerialized as illustrated below: growth.
To facilitate share certificate deposit, the investor needs to submit a duly completed Demat Request Form together with the Share Certificates to the company registrar, who after examining the required documents cancels the physical certificates and inform The Securities Market to transfer the number of securities to the investor account.
Alternatively, investors may surrender the share certificates in physical form to The Securities Market accredited broker, who will arrange to get them sent to and verified by the company registrar. Upon confirmation, the investor account is credited with the equivalent number of shares.
After dematerialization, the investor will no longer hold physical share certificates, but will maintain an account with the CSD, in which his ownership is reflected as a computerized credit entry.
- Demat Request Form.
- Investor Number.
- Identification card.
Investor Accounts are credited only after the deposited certificates have been validated by the company registrars in order to detect deposits of forged, loss or stolen certificates.
Investor can withdraw securities from the CSD by submitting a request through the Investor Help Desk. Upon withdrawal, the Investor Account is debited and the relevant company registrar is instructed to issue a certificate in the name of the Investor.
4)TRANSFERS
An investor may have one account with one or more Brokers. The investor can transfer securities among these accounts by making the request through the relevant Broker.
5)STATEMENT OF ACCOUNTS.
CSD provides regularly statement of accounts to all holders of active investor accounts and upon request to other investors. All statement of accounts are mailed directly to Account Holders at the addresses recorded in the CSD system.
The account statement allows the investor to confirm his/her legal ownership upon any securities transaction and to check his/her stock account movements and balances during a given period.
6)OPENING A TRADING ACCOUNT WITH A BROKER growth.
Investors are required to set up a trading account with ADSM and DFM accredited broker before they can start trading. This can usually be done in 1 hour. The Completed Account Opening Form with the required documents should be submitted to the brokers, bearing in mind the possibility for an investor to open an account with more than one broker. When an account is opened the applicant becomes an investor participant and will be entitled to issue instructions for trading securities.
An investor, who wants to start trading on dematerialized titles, is required to submit a signed transfer form to the CSD, stating the quantities of shares he intends to trade or to transfer. The CSD in turn will undertake the transfer of shares from the investor account to his Trading Account with the broker, according to his/her instructions.
7)PLEDGE AND RELEASE OF SECURITIES
The Depository Services also include the recording of pledges in favor of lending institutions with the agreement of both the borrower & the lending institution. The CSD procedures require that both the pledger (borrower) and the pledgee (lending institution) complete and sign the pledge application form. Therefore, CSD mark the securities pledged in the investor account for the quantity agreed by the different parties and in accordance with the details submitted in the CSD Pledge Form by the parties concerned.
In the records of CSD, a pledger remains the shareholder of his pledged securities. However, he cannot avail of these shares unless the pledgee submits the appropriate pledge release instruction in accordance with CSD Procedures. Any benefits however, still accrue to the pledgee unless stated or agreed otherwise. Completed and duly signed pledge or release forms are required by authorized signatories of the pledgee.
8)TRANSMISSION
In the case of transmission, the claimant has to provide The Securities Market with valid transmission documents from the court. The CSD, after checking the accuracy of the application and the supported documents, will transfer securities to the account of the claimant.