The Securities and Exchange Commission of Pakistan (SECP) in consultation with all the stakeholders has directed CDC to implement the standardized Sub-Account Opening Form (SAOF). The much deliberated new Sub-Account Opening Form (SAOF) has been circulated by CDC to all participants and has also been placed on CDC’s corporate website. 

Through this initiative, the interest of the Sub-Account Holders has also been protected. The Participants will only be authorized to handle Book-entry Securities owned by their respective Sub-Account Holders in accordance with the authorization provided in the SAOF instead of general purpose or blanket authorization obtained by the Participants from their Sub-Account Holders which was prevalent in the market. Further, the Sub-Account Holders can remain updated about the position and activities in their sub-account on real time basis by subscribing to CDC access which includes IVR, Weband SMS.

Built-in authority in SAOF:

The Central Depositories Act, 1997 restricts the Participants from handling book entry securities without authority from their client (Sub-Account holder). In the new SAOF, a set of built-in authorities that serve as a one-time fixed authorization for handing of the Securities of Sub-Account holders has been introduced. This willnot only standardize the different practices prevailing in the market forhandling clients securities but will also help doing away with the need ofobtaining authorities from the clients on each occasion. 

Built-in authority in the new SAOF authorizes participants to handle clients’ securities for settlement of any underlying transactions (trades). These include off-market transactions, pledge transactions to Stock Exchanges and Clearing Co., recovery of payment, charges & losses against any underlying market purchase or any other transactions, movement of client’s securities pertaining to portfolio transfer and transactions pertaining to lending and borrowing or gift of securities to family members orother persons.

It is important to note that this built-in authority enables the Participants to execute only defined transactions. For any other transaction, Participants are required to obtain a specific authority in writing from clients on each occasion. Such authorization should be on a Non-Judicial stamp paper where the value of securities being transacted is Rs. 500,000 or more.