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National Clearing Company of Pakistan

Explore NCCPL Pakistan: Market Insights & Company Culture| LinkedIn

Today, I’m excited to explore the versatile NCCPL Pakistan: Market Insights & Company Culture| LinkedIn. The National Clearing Company of Pakistan Limited (NCCPL) is a significant institution of Pakistan’s capital market, providing clearing and settlement services to the Pakistan Stock Exchange Limited (PSX). It was established in 2001 as a result of the merger of three clearing houses of Karachi, Lahore, and Islamabad stock exchanges. NCCPL is a non-profit organization, licensed by the Securities and Exchange Commission of Pakistan (SECP) as a clearing house and a central securities depository. NCCPL plays a vital role in ensuring the efficiency, transparency, and stability of the securities market in Pakistan.

What is a Securities Depository?

Explore NCCPL Pakistan Market Insights & Company Culture

A securities depository is a specialized financial organization that holds securities, such as shares and bonds, either in electronic form (dematerialized) or in paper form (immobilized), and allows the ownership to be easily transferred through a book entry rather than by a physical exchange of certificates. A securities depository also performs other functions, such as:

  • Safekeeping of securities and ensuring their integrity
  • Facilitating the settlement of securities transactions and the delivery versus payment (DVP) mechanism
  • Processing corporate actions, such as dividends, interest, and principal payments, as well as proxy voting
  • Providing securities lending and borrowing services to enhance market liquidity
  • Implementing risk management measures to protect the interests of investors and market participants
  • Offering information and reporting services to facilitate market transparency and regulatory compliance

A securities depository can be national or international in nature, and may cater to a specific type of security, such as government bonds or corporate equities. Some examples of securities depositories are:

  • Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) in India
  • Central Securities Depository of Iran (CSDI) in Iran
  • Euroclear and Clearstream in Europe
  • Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC) in the United States

NCCPL: Empowering Financial Markets 2023

NCCPL is the sole securities depository and clearing house in Pakistan, serving over 500 members, including brokers, banks, asset management companies, insurance companies, and other financial institutions. NCCPL offers a range of products and services to facilitate the trading, clearing, settlement, and custody of securities in the Pakistani market. Some of the key products and services offered by NCCPL are:

National Clearing Company Of Pakistan Limited Streamlined Settlement Processes

NCCPL operates the National Clearing and Settlement System (NCSS), which is an automated and integrated system that enables the settlement of securities transactions on a net basis, using the DVP model. NCSS also supports the settlement of transactions in government securities, such as treasury bills and Pakistan Investment Bonds, through the Subsidiary General Ledger (SGL) accounts maintained by NCCPL at the State Bank of Pakistan. NCSS ensures the timely and accurate settlement of securities transactions, reducing the settlement risk and enhancing the market efficiency.

Investor Protection and Confidence

NCCPL assigns a Unique Identification Number (UIN) to each investor who trades in the securities market, and maintains a UIN Information System (UIS) that records the details of the investors and their transactions. NCCPL also implements a robust Risk Management System (RMS) that monitors the exposure and margin requirements of the market participants, and collects and maintains adequate collateral to cover the potential losses in case of a default.

NCCPL also administers the Capital Gain Tax (CGT) regime, which is a tax levied on the profits made from the sale of securities, and collects and deposits the CGT to the Federal Board of Revenue (FBR). NCCPL also provides a National Custodial Services (NCS) facility, which enables the investors to hold their securities in a safe and secure manner, and access various corporate actions and benefits associated with their securities.

NCCPL also offers a Two-Factor Authentication (2FA) service, which enhances the security and authentication of the online access to the NCCPL systems. NCCPL also operates a Centralized Know Your Customer (KYC) Organization (CKO), which is a centralized repository of the KYC information of the investors, and facilitates the compliance with the anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

NCCPL also provides a Whistle-Blowing Policy, which encourages the reporting of any unethical or illegal activities or practices within NCCPL or its stakeholders. All these measures help to protect the rights and interests of the investors, and foster confidence and trust in the securities market.

Market Integration

NCCPL also plays a key role in integrating the Pakistani securities market with the regional and global markets, and facilitating cross-border investments and transactions. NCCPL has established links with various international securities depositories, such as Euroclear, Clearstream, CDSL, NSDL, and CSDI, to enable the settlement of foreign securities in Pakistan and vice versa. NCCPL also offers a Roshan Digital Account (RDA) facility, which is a digital banking platform that allows the non-resident Pakistanis (NRPs) to open and operate bank accounts in Pakistan, and invest in various securities and financial products, such as stocks, bonds, mutual funds, and real estate investment trusts (REITs).

NCCPL also provides a Murabahah Share Financing (MSF) service, which is a Shariah-compliant financing mechanism that allows the investors to purchase securities on a deferred payment basis, using the Islamic mode of financing. NCCPL also supports various leveraged products, such as Margin Trading System (MTS), Margin Financing System (MFS), and Securities Lending and Borrowing (SLB), which enable the investors to enhance their returns and liquidity by borrowing or lending securities or funds.

Clearing Company Of Pakistan Ltd Financial Services

NCCPL also offers a Next Day Netting Facility (NDNF), which allows the investors to net off their buy and sell positions in the same security on the next day, and reduce their settlement obligations. NCCPL also facilitates the issuance and listing of new securities in the market, such as e-IPOs, exchange-traded funds (ETFs), and sukuk bonds. All these initiatives help to diversify and deepen the securities market, and attract more domestic and foreign investors.

Advantages of Utilizing NCCPL Services

NCCPL provides various benefits and advantages to the investors and market participants who utilize its services, such as:

Real-Time Information Access Facebook

NCCPL provides online access to its systems and services, such as NCSS, UIS, NCS, 2FA, CKO, MSF, MTS, MFS, SLB, NDNF, and e-IPO, through its web portal and mobile application. NCCPL also provides SMS and e-mail alerts service, which notifies the investors and market participants about their transactions, settlements, margins, corporate actions, and other relevant information. NCCPL also publishes various market information and reports, such as trade vs settlement value and volume graphs, securities margin rates, VAR margins, settlement and unlisted TFC reports, BTB rates, list of banks and auditors, net capital balance guidebook, and list of firms with satisfactory QCR ratings. NCCPL also provides a feedback and complaint management system, which allows the investors and market participants to share their feedback, suggestions, queries, and complaints, and receive timely responses and resolutions. All these features enable the investors and market participants to access real-time and accurate information, and make informed and timely decisions.

Risk Mitigation Strategies

NCCPL implements various risk mitigation strategies to ensure the safety and soundness of the securities market, and protect the investors and market participants from potential losses and defaults. Some of the risk mitigation strategies adopted by NCCPL are:

  • DVP settlement, which ensures the simultaneous exchange of securities and funds, and eliminates the settlement risk
  • Netting of transactions, which reduces the settlement obligations and the counterparty risk
  • Collateral management, which involves the collection and maintenance of adequate margins and collateral from the market participants, and the liquidation of the collateral in case of a default
  • Mark-to-market valuation, which involves the daily valuation of the securities and the margins based on the prevailing market prices, and the adjustment of the margins accordingly
  • Exposure monitoring, which involves the continuous monitoring of the exposure and margin requirements of the market participants, and the generation of alerts and calls for additional margins or collateral
  • Default management, which involves the identification and declaration of a defaulting participant, and the activation of the default management procedures, such as the invocation of the collateral, the close-out of the positions, the allocation of the losses, and the recovery of the dues
  • Settlement guarantee fund, which is a fund maintained by NCCPL to cover the losses arising from the default of a participant, and to ensure the completion of the settlement
  • Business continuity and disaster recovery, which involves the establishment and maintenance of backup systems and facilities, and the implementation of contingency plans, to ensure the continuity and recovery of the operations in case of a disruption or disaster

Cost-Efficiency in Transactions

NCCPL provides cost-efficiency in transactions to the investors and market participants, by offering various services and facilities that reduce the transaction costs and enhance the transaction speed. Some of the services and facilities that contribute to the cost-efficiency are:

  • Dematerialization of securities, which eliminates the need for physical certificates and the associated costs and risks of handling, storing, and transferring them
  • Electronic book entry system, which enables the fast and easy transfer of ownership of securities through a simple entry in the electronic ledger, without the need for any paperwork or manual intervention
  • Centralized record keeping, which ensures the accuracy and completeness of the records of the securities holdings and transactions of the investors and market participants, and avoids any duplication or discrepancy
  • Reduced transaction fees, which are charged by NCCPL for its services and facilities, and are lower than the fees charged by other intermediaries or agents
  • Increased transaction speed, which is achieved by the automation and integration of the systems and processes of NCCPL, and the reduction of the settlement cycle and the settlement time

The Future of Securities Depositories in Pakistan

NCCPL is constantly striving to improve and innovate its products and services, and to meet the evolving needs and expectations of the investors and market participants. NCCPL is also committed to aligning its standards and practices with the international best practices and benchmarks, and to enhancing its cooperation and collaboration with the regional and global securities depositories and organizations. Some of the future plans and initiatives of NCCPL are:

  • Implementing the Centralized e-IPO System (CES), which will enable the investors to apply for the initial public offerings (IPOs) of the securities through the online platform of NCCPL, and to receive the allotment and refund of the securities and funds electronically
  • Launching the Centralized e-Dividend Repository (CEDR), which will act as a centralized database of the dividend information of the listed companies, and will facilitate the distribution and collection of the dividends to and from the investors electronically
  • Developing the Centralized e-Voting System (CEVS), which will enable the investors to exercise their voting rights in the general meetings of the listed companies through the online platform of NCCPL, and to receive the results and resolutions of the meetings electronically
  • Introducing the Centralized e-Proxy System (CEPS), which will enable the investors to appoint and revoke their proxies for the general meetings of the listed companies through the online platform of NCCPL, and to receive the confirmation and verification of their proxies electronically
  • Expanding the scope and coverage of the RDA facility, which will allow the NRPs to invest in more securities and financial products, such as derivatives, commodities, and futures, and to avail more services and facilities, such as online trading, portfolio management, and advisory services
  • Enhancing the features and functionalities of the MSF service, which will allow the investors to avail more options and flexibility in the financing terms and conditions, such as the tenor, the pricing, the rollover, and the early settlement
  • Developing the Centralized e-Warehouse Receipt System (CEWRS), which will enable the issuance and trading of the warehouse receipts, which are documents that represent the ownership and quality of the agricultural commodities stored in the warehouses, and will facilitate the financing and hedging of the commodities
  • Establishing the Centralized e-Registry System (CERS), which will enable the registration and verification of the ownership and encumbrance of the immovable properties, such as land and buildings, and will facilitate the issuance and trading of the REITs and the mortgage-backed securities

Conclusion

NCCPL is a vital institution of the Pakistani securities market, providing clearing and settlement services to the PSX. NCCPL is also a central securities depository, offering various products and services to facilitate the trading, clearing, settlement, and custody of securities in the Pakistani market. NCCPL plays a key role in ensuring the efficiency, transparency, and stability of the securities market, and in protecting the rights and interests of the investors and market participants. NCCPL also plays a key role in integrating the Pakistani securities market with the regional and global markets, and in facilitating cross-border investments and transactions.

NCCPL provides various benefits and advantages to the investors and market participants who utilize its services, such as real-time information access, risk mitigation strategies, and cost-efficiency in transactions. NCCPL is constantly striving to improve and innovate its products and services, and to meet the evolving needs and expectations of the investors and market participants. NCCPL is also committed to aligning its standards and practices with the international best practices and benchmarks, and to enhancing its cooperation and collaboration with the regional and global securities depositories and organizations.

FAQs

What is the role of NCCPL in the Pakistani securities market?

NCCPL is the sole securities depository and clearing house in Pakistan, providing clearing and settlement services to the PSX. NCCPL also offers various products and services to facilitate the trading, clearing, settlement, and custody of securities in the Pakistani market.

What are the benefits of using NCCPL services?

NCCPL provides various benefits and advantages to the investors and market participants who utilize its services, such as real-time information access, risk mitigation strategies, and cost-efficiency in transactions.

How can I access NCCPL services?

You can access NCCPL services through its web portal and mobile application, or through its authorized agents, such as brokers, banks, and asset management companies. You can also contact NCCPL through its customer support center, or visit its offices in Karachi, Lahore, and Islamabad.

Jesus

Greetings, I am Jesus Gallo, a fervent enthusiast of all things technological. Hailing from the vibrant city of Birmingham, UK, my passion for technology has propelled me to traverse the globe, encountering diverse species of innovation from the frosty expanses of Antarctica to the scorching sands of the Sahara. Armed with a wealth of experience as a seasoned technology specialist, I possess the acumen to decipher intricate technical concepts and communicate them with utmost clarity and conciseness. In my current capacity at Evidence News, I am afforded the privilege to channel my expertise, crafting insightful reports that illuminate the forefront of technological advancements and breakthroughs.

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