Asia-PacificCentral SecuritiesDepositories Group

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Secretariat : MCD & SCANS

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ContentsMESSAGE FROM CHAIRMAN OF ACG SECRETARIAT 2002 3

ACG MEMBERS 4

TASK FORCE UPDATES 51. BEST PRACTICE TASK FORCE 52. SETTLEMENT RISK MANAGEMENT TASK FORCE 53. EXCHANGE OF INFORMATION TASK FORCE 64. CROSS BORDER LINKAGE TASK FORCE 65. TECHNICAL TASK FORCE 7

TASK FORCE ACTIVITIES 8

NEWS CORNER 91. THAILAND SECURITIES DEPOSITORY 9

THE 6TH GENERAL MEETING OF THE ACG 9

2. MALAYSIAN CENTRAL DEPOSITORY 11CDS 10TH ANNIVERSARY 11STREAMLINED PROCESSES FOR SECURITIES TRANSFER BY MCD 12

3. CENTRAL DEPOSITORY COMPANY OF PAKISTAN LIMITED 12CDC 5TH ANNIVERSARY 12OPENING OF INVESTOR ACCOUNT SERVICES IN ISLAMABAD 13 LAUNCH OF TRUSTEE BUSINESS OPERATIONS BY CDC 13 RE-ENGINEERING OF CDS 13 CUSTODIAL SERVICES TO CLOSE END MUTUAL FUNDS 13NEW CDS FUNCTIONALITIES 13

4. CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED 14A STATUS UPDATE 14ON-LINE INTER-DEPOSITORY TRANSFERS (OLIDT) 14CDSL EXTENDS ITS “E-ARMS” 14ABOLISHING OF ACCOUNT CLOSURE CHARGES 14ADMISSION OF DEBT INSTRUMENTS ON BOTH THE DEPOSITORIES 14SEBI SIGNS MOU ON MUTUAL CO-OPERATION WITH FINANCIAL SERVICES COMMISSION, MAURITIUS 15

5. JAPAN SECURITIES DEPOSITORY CENTER, INCORPORATED 15THE LAW CONCERNING PAPERLESS STRAIGHT BOND BECOMES EFFECTIVE IN JANUARY 2003 15UNIFIED CLEARING ORGANIZATION COMMENCES CLEARING SERVICES IN JANUARY 2003 15

6. THOMAS MURRAY 16NOTES OF APPRECIATION 16CUSTODY AND SETTLEMENT INFRASTRUCTURE RISK RANKINGS (CSIRR) 16

More than 64 islands arescattered off the coast of thestate of Johor, ranging from

tiny islets, such as this one, tolarger well-known resort

islands such as Pulau Besar.

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Message from Chairman,ACG Secretariat 2002

Dear ACG Members,

It has been a great honour indeed for both MCD and SCANS to be given the opportunity to serve as ACG Secretariatfor 2002. We wish to take this opportunity to thank all members who have been very supportive and haveprovided us with valuable contribution and support during our tenure as the ACG Secretariat.

We are also pleased to inform all members that Thailand Securities Depository Company Limited, as the new ACGSecretariat, shall continue the work of the ACG Secretariat and the issuance of the ACG Newsletters for 2003.

As this shall be the last issue of ACG Newsletter from MCD and SCANS for 2002, we would like to wish allmembers a Happy New Year.

Thank you

FATHI RIDZUAN AHMAD FAUZIChairmanACG Secretariat 2002

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Pulau Perhentian, Malaysia’squintessential tropical island, is thelarger of a duo of islands in theSouth China Sea, lying off thenorthern Terengganu coast.

ACG MembersCountry Depository E-mail Website

Australia ASX Settlement and Transfer angus.richards@asx.com.au www.asx.com.auCorporation Pty LimitedSFE Clearing dmonk@sfe.com.au www.sfe.com.au

Bangladesh Central Depository of Bangladesh cdbl@bol-online.com NilLtd.

China China Securities Depository and chuangao@ssccrc.com www.ssccrc.comClearing Corporation Limited www.sse.org.cn

Hong Kong Hong Kong Securities Clearing bryanchan@hkex.com.hk www.hkex.com.hkCompany LimitedHong Kong Monetary Authority hkma@hkma.gov.hk www.info.gov.hk/hkma

India National Securities Clearing rnarain@nse.co.in www.nseindia.co.inCorporationNational Securities Depository Limited jsule@nsdl.co.in www.nsdl.co.inCentral Depository Services (India) Ltd. hitendrap@cdslindia.com www.centraldepository.com

Indonesia Indonesian Central Securities josef@ksei.co.id www.ksei.co.idDepository Indonesian Clearing & Guarantee eddy.sugito@kpei.co.id www.kpei.co.idCorporation

Japan Japan Securities Clearing k-nishimukai@jssc.co.jp www.jssc.co.jpCorporation IncJapan Securities Depository Center Inc t-kumakura@jasdec.com www.jasdec.com

Korea Korea Securities Depository goper@ksd.or.kr www.ksd.or.krMalaysia Malaysian Central Depository Sdn Bhd izham@klse.com.my www.klse.com.my

Securities Clearing Automated zuraiha@klse.com.my www.klse.com.myNetwork Services Sdn Bhd

New Zealand New Zealand Central Securities katzp@rbnz.govt.nz www.rbnz.govt.nzDepository

Pakistan Central Depository Company aftab_diwan@cdcpak.com www.cdcpak.comof Pakistan Limited

Philippines Philippine Central Depository Inc. jerry_arcangel@pcd.com.ph www.pcd.com.phSingapore The Central Depository (Pte) Limited scd@sgx.com www.sgx.comSri Lanka Central Depository Systems (Pvt) Ltd. cse@sri.lanka.net www.lanka.net/cseTaiwan Taiwan Securities Central Depository e855110@tscd.com.tw www.tscd.com.tw

Company LimitedThailand Thailand Securities Depository kongkeaw@set.or.th www.set.th

Company LimitedUzbekistan The State Central Depository of yadgarov@deponet.uz www.deponet.uz

Securities of the Republic of Uzbekistan

Task Force UpdatesBest Practice Task Force

Members• Austraclear Limited, Australia• Central Depository Company of Pakistan Limited• National Securities Depository Limited, India• New Zealand Central Securities Depository Limited• Philippine Central Depository Incorporated• Securities Clearing Automated Network Services Sdn. Bhd. (SCANS), Malaysia• The Central Depository (Pte) Limited, Singapore

Convenor• Hong Kong Securities Clearing Company Limited• Email Contact: bryanchan@hkex.com.hk

Objective• Continue to develop best practice guidelines for ACG members. • Monitor best practice goals and Key Performance Indicators (KPIs) of members.• Monitor and disseminate information on fee structures.

Settlement Risk Management Task Force

Members• Central Depository Company of Pakistan Limited• Central Depository of Bangladesh Limited• Central Depository Systems (Pvt) Limited, (Sri Lanka)• Hong Kong Securities Clearing Company Limited• Korea Securities Depository• Securities Clearing Automated Network Services Sdn. Bhd. (SCANS), Malaysia• China Securities Depository and Clearing Corporation Limited • Taiwan Securities Central Depository Company Limited• Thailand Securities Depository Company Limited• National Securities Clearing Corporation, India

Convenor• Korea Securities Depository• Email Contact : goper@ksd.or.kr

Objective• To develop the understanding of risk management practices. • To examine the impact of new trends on settlement risk management.

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Loaf-shaped Pulau Rengis, atiny isle offshore from PulauTioman, is a popular attractionfor snorkelling and scuba-diving activities.

Exchange of Information Task Force

Members• Central Depository of Bangladesh Limited• Indonesian Central Securities Depository• Japan Securities Clearing Corporation• Japan Securities Depository Center Incorporated• Malaysian Central Depository Sdn. Bhd.• National Securities Depository Limited, India• Securities Clearing Automated Network Services Sdn. Bhd., Malaysia

Convenor• Japan Securities Depository Center Incorporated• Email Contact : t-kumakura@jasdec.com

Objective• Promote the facilitation of the exchange of information. • Promote mutual co-operation amongst ACG members.• Maintenance of a list of contacts for all ACG members.

Cross Border Linkage Task Force

Members• ASX Settlement and Transfer Corporation Pty Limited , Australia• Austraclear Limited, Australia• Hong Kong Securities Clearing Company Limited• Japan Securities Settlement & Custody, Inc.• Korea Securities Depository• New Zealand Central Securities Depository Limited• Securities Clearing Automated Network Services Sdn. Bhd., Malaysia• Taiwan Securities Central Depository Company Limited• The Central Depository (Pte) Limited, Singapore• The State Central Depository of Securities of the Republic of Uzbekistan• Indonesian Clearing & Guarantee Corporation

Convenor• Japan Securities Settlement & Custody, Inc.• Email Contact : k-nishimukai@jssc.co.jp

ObjectivesDevelop a model of multilateral cross-border linkages based on research of European models and bestpractices for linkages.

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Acknowledged as one of thebest diving spots in SoutheastAsia, Pulau Sipadan is locatedoff the small coastal town ofSemporna on Sabah’s easterncoast.

Technical Task Force

Members• Austraclear Limited, Australia• Central Depository of Bangladesh Limited• Hong Kong Securities Clearing Company Limited• Malaysian Central Depository Sdn. Bhd• National Securities Depository Limited, India• New Zealand Central Securities Depository Limited• Securities Clearing Automated Network Services Sdn. Bhd., Malaysia• China Securities Depository and Clearing Corporation Limited• Taiwan Securities Central Depository Company Limited• Thailand Securities Depository Company Limited.

Convenor• National Securities Depository Limited, India• Email Contact : jsule@nsdl.co.in

ObjectiveInvestigate business proposals in relation to technical issues such as e-commerce and security of systemnetworks.

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Pulau Duyung is the mostwell-known boat building

area in Terengganu and isalso renowned for its dried

and salted fish, and fishcracker industries.

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Pulau Kapas is an island renownedfor its pure emerald waters, whitesandy beaches, swaying palm trees,caves with swallows’nests, dazzlingmarine life and superb coralformations.

Task Force ActivitiesExchange of Information Task Force: In accordance with the agreement at the Annual Meeting held in KualaLumpur in September 2001 to follow up the survey conducted by the Task Force in 2001, the Task Forcedistributed to all members the questionnaire on implementation of straight-through processing and deliveryversus payment, together with the request to update the “Overview of CSDs in Asia-Pacific Region” at thebeginning of September 2002.

The Task Force reported the survey results to the General Meeting held in Bangkok, Thailand in November 2002.The Task Force proposed to the members its activities and projects for the year 2003 as follows, which wereduly supported and agreed by the members.

1) Revision of the Terms of Reference of the Exchange of Information Task Force2) Update of Overview of CSDs in Asia-Pacific Region3) Update of Status Report on Implementation of STP and DVP4) Organization of Cross-Training Seminar 20035) Integration of Questionnaires by 5 Task Forces

News CornerThe 6th General Meeting of the Asia-Pacific Central Securities Depositories Group(ACG), November 18 – 19, 2002

The Asia-Pacific Central Securities Depositories Group (ACG) successfully achieved its intentions and objectivesby once again bringing together its members to develop and share ideas and knowledge. Through November18-19, 2002, the Thailand Securities Depository (TSD) washonored to serve as the host for the 6th General Meetingof the Asia-Pacific Central Securities Depositories Groupat Shangri-la Hotel in Bangkok. All the representativeswho attended were prominent executives from CentralSecurities Depositories in the Asia-Pacific region. ThisACG annual meeting included 41 delegates of 24 deposi-tories from 17 countries: Australia, Bangladesh, China,Hong Kong, India, Indonesia, Japan, Korea, Malaysia, NewZealand, Pakistan, Philippines, Republic of Uzbekistan,Singapore, Sri Lanka, Taiwan R.O.C. and Thailand.

The meeting was organized with strong support and co-operation from various leading organizations in theglobal market, such as the Capital Market Company (CAPCO), Deutsche Bank AG, Financial InfrastructureSolutions, HSBC Holding PLC., OM AB, Standard Chartered Bank as well as the Stock Exchange of Thailand. Themain theme of the seminars and meetings covered topics such as CCP (Central Counterparty), STP (StraightThrough Processing) and T+1 settlement.

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Pulau Payar marine park, isendowed with a diversity of marineflora and fauna and manyendangered species of fishes dwellwithin this sanctuary.

On November 18, 2002 which was the first day of the event, the delegates had an opportunity to observe theworking environment and an interesting presentation from the Stock Exchange of Thailand, the ThailandSecurities Depository and other subsidiaries. Afterwards, a number of speakers from Thailand’s Securities andExchange Commission, the Bank of Thailand, the Stock Exchange of Thailand, World Bank, brokerage firms andcommercial banks addressed both the delegates and a general audience composed of both international anddomestic participants drawn from different areas of the Thai capital markets. The themes were, for example,“Seamless, Scripless, and in Real Time: CSD and CCP Today”, “The New Era of CSD & CCP: how to enhance yourvalue-added services” and “Current Status of STP”.

The second day of the General Meeting mainly focused on the work of five Task Forces on the subjects of BestPractice, Exchange of Information, Cross Border Linkages, Settlement Risk Management and Technical Issues,which are summarized as follows:

1. Best Practice Task ForceThe group acknowledged the survey results aimed at assessing the process for developing Best PracticeGuidelines for ACG members. Generally, the Best Practice Task Force Objectives were considered appropriateexcept for use as the basis for T+1 settlement. From the survey of Best Practice Goals on system performanceand management, only goals on T+1 settlement have not changed compared to those of the year 2001; thatis, 9 members have achieved inputting matched trades into this system and only 1 member has reported toachieve T+1 settlement. With respect to Management Practice, most of the members have some sort ofcontinuous improvement programs to obtain and incorporate customer feedback. In addition, ACG membersachieved significant progress, especially in implementing securities lending and borrowing facilities.However, there may be a need to address other topics or issues in developing Guidelines, Goals and KPI, anessential to meet relevant international standards and recommendations. Best Practice Goals and KPIshould be developed with a view to measure achievements/progress of the ACG Best Practice Guidelines thatpotentially could be combined to serve as a means to drive progress forward and address commonchallenges facing ACG members.

2. Exchange of Information Task ForceTo facilitate the exchange of information, experience and innovations between members of the ACG, it is feltthat it was important to enhance professionalism, technical know-how, operational skills, and efficiency ofservices of CSD executives via an exchange program, and, when necessary, establish such a program.Moreover, the ACG should promote mutual assistance and co-operation among members by identifyingpossible business areas for collaboration for better servicing of CSD’s combined needs, sharing informationto perform better risk management and facilitate the monitoring of participants in CSD’s services by poolinginformation for access by any CSD. Proposed 2003 Task Force Projects consist of updating the Overview ofCSDs, updating the Survey on STP & DVP and organizing a Cross-Training Seminar for 2003.

3. Cross Border Linkage Task ForceThe Cross-Border Linkage Readiness Survey was performed with the objective to set up a linkage model,study the need for CSD-CSD linkages and reconsider the principal objectives. From the evidence of thesurvey, there were large differences among markets with low outbound cross-border investment activityamongst only a few capital export and import countries in the region, and no comprehensive data for theentire region. The main route for cross-border settlement is through “Local Custodians” and “GlobalCustodians”. International Central Securities Depository or ICSD routes, such as Euroclear, Clearstream, arenot actively used while CSD-CSD linkages are rarely utilized. Nearly 50% Of the CSDs have restrictions onFOREX and money transfers. FOREX and money remittance is one of the key issues for the introduction ofCSD-CSD linkages. Furthermore, a small number of the countries have legal barriers and some countries donot allow outbound investment. Most countries ensure tax relief. In terms of SWIFT capability, nearly 50%are capable of SWIFT communication. SWIFT has therefore become one of the basic communication tools.

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Thus, there is a need for the establishment of CSD-CSD linkages, although potential users are still limited.As for legal infrastructure, CSDs need to make special arrangements for opening accounts on each occasionand sufficient tax relief would support active cross-border investment.

4. Settlement Risk Management Task ForceThe focus on market efficiency in the Securities Deposit and Settlement Systems of many countries is basedon using the book-entry transfer settlement and netting settlement systems, whereas market stabilitymechanisms generally come from adopting such safeguards as Same-day Funds, Delivery Versus Payment(DVP) and Settlement Guarantee Funds. Besides these safeguards, Securities Borrowing and Lending (SBL)is another tool to support settlement risk management even though it still has accounting impediments,taxation obstructions and a lack of supply. The Task Force came up with a number of ideas about DVPalthough FOREX restrictions could present major obstacles for the establishment of the linkage - with SWIFTserving as a common communication tool for the linkage operations. As well as this, the Task Force studiedthe KSD–JSSC Link issues such as key characteristics, regulatory provisions, overseas network, registration,entitlement processing, and communication, etc.

5. Technical Task ForceThis year, ACG members were able to show fairly positive moves towards the process of standardization.Significant automation has been achieved in the area of order placing or execution and instructions fortransfer of funds or securities, but there is still scope for improvement in the automation of the tradeconfirmation process. As regards to the data transfer mechanisms that are in wide use among ACGmembers, ISO 15022 and SWIFT are the most widespread standards. Globally accepted standards are alsobecoming widely used among ACG members. However, ACG members are at different stages in automatingthe process. Quite a few members use proprietary standards and they may need to reexamine their futurestrategies in view of the need to connect to various entities both locally and globally. There is a scope fordepositories to extend their services through e-business in providing relevant market information and in thearea of corporate actions. Future work for the Task Force could involve a focus on investigating howdepositories conduct corporate actions services and how it may be possible to enhance these services andreduce risk through e-business.

This 6th General Meeting of the ACG representatives thus concluded after a highly productive exchange ofinformation. Certainly, it brought together new ideas and knowledge on useful developments in workingprocedures and operations. With this information, the various ACG members will be able to improve their CSDsand deal with the challenges arising from rapid changes in the world capital markets.

Malaysian Central Depository

CDS 10th Anniversary: The first CDS account was opened on 13 November 1992, heralding a new era ofsecurities settlement and clearing for the Malaysian capital market.

From humble beginnings, the Central Depository System (CDS) has matured into one capable of handlingsophisticated and innovative trade-related functions. Since its launch in 1992, the CDS has attracted local andinternational market participants. CDS account holders have up-to-date information on their holdings and theconvenience of electronic securities transfer and trade settlement.

The CDS was part of the Kuala Lumpur Stock Exchange’s (KLSE) vision to accelerate the development of theMalaysian securities industry in the 1990s.

Snowy white beaches, clear azurewaters, coconut groves, and tangledrain forests combine to make PulauTioman one of the world’s most spectacular tropical islands.

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Pulau Redang, located 50km off thecoast of Kuala Terengganu, is one ofthe most beautiful and exotic islands

in Malaysia.

STREAMLINED PROCESSES FOR SECURITIES TRANSFER BY MCD : In its efforts to meet the changing needs ofits depositors, Malaysian Central Depository (MCD) has introduced enhanced processes in the handling ofsecurities transfer requests, which came into effect on Monday, 30 December 2002. The changes introduced byMCD will ensure more efficient processing of transfer requests in the Central Depository System (CDS).

The following are some of the changes affecting depositors in particular:

1) The current 10 Approved Reasons for Transfer have been reclassified into 2 broad categories:

a.Transfers that result in no change in beneficial ownership of securities - When the name of the beneficial owner is transparent and identical at both the securities accounts of the transferor (the person who initiates the transfer) and transferee (the person who receives the transferred securities).

b.Transfers that result in change in beneficial ownership of securities – This covers scenarios for the following transfers:

• pursuant to General Offer, • between family members, • arising from pledging of securities, • involving Government Authorities,• that require prior approval of MCD.

2) Depositors will have a longer time to submit their duly completed transfer requests with their respective ADAs/ADMs as the submission time has been extended from 12.00 pm to 3.00 pm.

3) The new term “Transfer” has replaced the term “Ordinary Transfer” for all CDS reports, CDS account statements, notices etc.

MCD will continue to send notices to depositors informing them of any debit or credit entries in their CDSaccounts arising from the transfers. These transfer transactions will also be reflected in the monthly Statementof Account to depositors.

The changes introduced by MCD are part of the ongoing review of processes and operations to furtherenhance efficiency in the capital market.

Central Depository Company of Pakistan Limited

CDC 5th Anniversary: It has been 5 years since CDC commenced operations on 3 September 1997 and it is aproud privilege to announce that they have been years of tremendous achievement and development. In thepassage of 5 years, CDC has emerged from a rudimentary settlement service agency to a full-fledged depositoryboasting a clientele of over 500 corporate entities and almost 7,000 retail investors.

Besides successfully dematerializing the Pakistani Capital Market, CDC has continually been engaged indiversification of operations and introduction of futuristic quality services. Moreover, it has been the consistenteffort of CDC to ensure that these services are extremely cost effective. Thus, over the years, CDC regularlyreduced tariff for both CDS and Investor Account.

Opening of Investor Account Services in Islamabad: After the successful introduction of Investor AccountServices (IAS) in Karachi and Lahore, the Central Depository Company recently introduced IAS in the nation’scapital, Islamabad.

Investor Account Service is a specialized service introduced by the Central Depository Company for thoseinvestors who desire maximum security of their securities. By opening an Investor Account, investors no longerhave to worry about safekeeping and control of their investment. This service enables account holders to havesole control over their account, thereby minimizing risks of unauthorized transfers of their electronic securities.Investor Account Holders are provided with periodic reports to confirm the position of their accounts along withthe facility of checking their security balances through the Interactive Voice Response Facility. With a clienteleof over 7,000 comprising of both individual and corporate entities, this service has blossomed into a specializedservice tailored to the security concerns of capital market investors.

Launch of Trustee Business Operations by CDC: In lieu with its efforts of introducing diversified services forthe capital market, the Central Depository Company has initiated Trustee Business Operations. Consequent tothe agreement between CDC and Arif Habib Investment Management Limited, CDC commenced TrusteeBusiness Operations from 1 March 2002 by acting as Trustee for the 2 open-end mutual funds, namely PakistanStock Fund (equity based fund) and Pakistan Income Fund (fixed income fund) launched by Arif HabibInvestment Management Limited.

Recently CDC also started acting as Trustee for United Money Market Fund (UMMF), launched and managed byUnited Asset Management Company Limited (UMCL, fully owned subsidiary of United Bank Limited of Pakistan).

Re-Engineering of CDS: Over its 5 years of existence, CDC has consistently been enhancing CDS throughmodification of existing and development of new/advanced functionalities in order to cater to the need of theclients. In line with this, CDC is currently conducting an exercise to re-engineer CDS so as to incorporate bettertechnologies and designs geared to introduce further ease and expediency for the clients. Realizing theimportance of the project, input was obtained from CDS Elements requesting them to participate in theRe-engineering exercise by providing comments and suggestions enabling CDC to design a more adept andcomprehensive system.

Custodial Services to Close End Mutual Funds: Consequent to approval from SECP, CDC is offering custodialservices to Close End Mutual Funds under the Investment Advisory Rules 1971. Currently, CDC is providingcustody to the following Close End Mutual Funds:

• Safeway Mutual Fund Limited• Dominion Stock Fund Limited• Al-Meezan Mutual Fund Limited• Prudential Stock Fund Limited• Investec Mutual Fund Limited

New CDS Functionalities: CDC is in constant pursuit of the goal to meet all the requirements of its customers.We are constantly adding new functionalities to Central Depository System, in order to meet the marketrequirements. Recently we have successfully completed the first book entry distribution of right shares ofPakistan PTA Limited.

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Part of the Tuanku Abdul RahmanMarine Park which consists of 5islands, just off the city of Kota

Kinabalu, Sabah.

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Central Depository Services (India) Limited

A Status Update: As of 13 December 2002, CDSL has 4,556 Issuers whose securities are admitted for demat.The spread of live depository services through Depository Participants of CDSL and their branches hasincreased to 105 towns and cities. An update of CDSL’s status under various parameters is mentionedhereunder:

Issuers whose securities are admitted to CDSL (equity) 4,556Number of Depository Participants registered 183Number of live Depository Participant connections to CDSL 400Number of cities/towns having live Depository Participants 105

On-line inter-depository transfers (OLIDT): Saturday, 14 December 2002 marked the beginning of a new phasein the short but successful history of the depository system in India with the commencement of “on-line inter-depository transfers”. This facility enables transfer of securities between the 2 depositories at any time duringthe specified business hours. For users, the facility represents a radical departure from the erstwhile two-batchformat, through which inter-depository transfers were effected.

Besides the convenience of “anytime” transfer of securities, the on-line facility has increased the users’ optionsin utilising securities received for subsequent transactions, particularly, for meeting delivery obligationsconsequent to sale of securities. The introduction of on-line, inter-depository transfers also enables investorsto reduce the counter-party risk especially for high value transactions, as funds and securities can movesimultaneously - where funds will move through the banking system and securities move on-line, throughdepositories.

This is being seen as a landmark achievement, as it involves on-line, seamless movement of securities betweendepositories without any manual intervention. This process is an essential element for implementation of STPacross all post-trade processes.

CDSL extends its “e-ARMS”: CDSL launched a facility, ‘e-ARMS’ (electronic - Automated Remote ManagementSupport) which will substantially enhance the level of its service to Depository Participants. ‘e-ARMS’ is a utilityfor instant, on-line technical support and service to DPs through CDSL’s own, secured network. With theintroduction of 'e-ARMS', any software related hitch at the Depository Participant’s front-end machine would beanalysed instantaneously by CDSL, on receipt of an intimation from the Depository Participant. DepositoryParticipants will be able to communicate with CDSL on existing secured network using interactive ‘chat’ facility.This will help saving on the cost of communication and will result in quicker resolution of technical difficulties,if any, enabling Depository Participants to service their clients more efficiently.

Abolishing of account closure charges: In response to representations from various constituents of thedepository system, the Securities and Exchange Board of India (SEBI) has directed that with effect from 1November 2002 Depository Participants should not levy any account closure charges.This directive is a step to giving investors the freedom to open and operate depository accounts withdepositories/Depository Participants of their choice.

Admission of debt instruments on both the depositories: The admission of securities by issuer companieswith both depositories in a dual-depository environment like India, facilitates movement of securities betweenbuyers and sellers across the depositories. This improves marketability of the securities and enables betterprice discovery, besides offering an opportunity to accountholders across the depositories to be able to makeinvestment in such instruments.The admission of equity shares (which are listed on any of the country’s stock exchanges) with both depositories

is already a mandatory requirement in India. SEBI has now extended the requirement of mandatory admissionto debt instruments.

SEBI Signs MoU on Mutual Co-Operation with Financial Services Commission, Mauritius:SEBI has signed a Memorandum of Understanding (MoU) with its Mauritian counterpart, Financial ServicesCommission, to strengthen communication channels and establish a framework for assistance and mutual co-operation between the 2 parties.

The MoU marks the beginning of greater collaboration between India and Mauritius to effectively regulate anddevelop securities and futures markets, in view of greater cross-border trade and cross-market linkagesbrought about by the globalisation of financial markets. This MoU is a significant step in furthering theunderstanding and the co-operation between the Government of the Republic of India and the Government ofMauritius.

Under the MoU, both regulators recognise the desirability for providing assistance and exchange of informationto aid each other in ensuring compliance with laws and regulations in their respective countries. The scope ofthe Memorandum includes providing assistance and taking action against insider dealing, marketmanipulation and other fraudulent practices in securities dealings. The exchange of information also seeks topromote high standards of fair dealing and integrity in the conduct of business. In essence, the signing of theMOU would help to safeguard the interests of market participants and ensure the fair and orderly developmentof the securities and futures markets of the signatory countries.

Japan Securities Depository Center, Inc.

The Law Concerning Paperless Straight Bond Becomes Effective in January 2003:As the Law Concerning Book-Entry Transfer of Corporate Bonds (the amended Law Concerning Book-EntryTransfer for Short-Term Corporate Bonds), which enables issuers to issue corporate bonds and investmenttrusts in a dematerialized form, will become effective in January 2003. JASDEC, entrusted by the Committee onReform of Securities Clearing and Settlement System of Japan Securities Dealers Association (JSDA), set upsub-committees of straight bond and investment trust in July and in September respectively, to discuss onscope of services including DVP settlement under the multi-tiered structure.

Unified Clearing Organization Commences Clearing Services in January 2003:On 29 November, the unified clearing organization, established by all of the stock exchanges and securitiesdealers association in Japan, and named as Japan Securities Clearing Corporation (JSCC), announced that itwill start the clearing services on 14 January 2003 after getting the license of clearing entity under theSecurities Exchange Law.

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4. THOMAS MURRAY

Notes of Appreciation: Thomas Murray and Support Banks would like to thank all the CSDs for their continuedsupport as the Depository Service now moves into its third year.

In the last year it had added a number of new regional support banks to support the services (including, SEB,Hansabank, ING, KAS, Barclays, SCMB and Standard Chartered) in addition to local bank providers to coverspecific markets. Current Depository Service activity includes circulating the major market assessments to thesupport banks and CSDs for review as part of the cycle for updating the assessments. It is also well advancedin terms of the data collection on the Asset Servicing Risk.

Custody and Settlement Infrastructure Risk Rankings (CSIRR): As presented by John Woodhouse to the ACGmeeting in Bangkok, the Custody and Settlement Infrastructure Risk Rankings (CSIRR) provided a summary ofthe scores and rankings for markets in the Asia Pacific region. The scores and rankings are updated eachmonth, based on the changes that occur in the markets. These market developments are also published on ourwebsite www.marketsselect.com as Market Newsflashes. A summary of those countries that have improvedtheir scores is given below:

Country Old Score New Score Old Global Ranking NewGlobal Ranking

Australia 81.90 82.27 1 1New Zealand 76.90 78.77 13 8South Korea 60.48 66.48 32 25Japan 61.70 62.14 29 30Malaysia 51.98 53.70 44 43Taiwan 50.10 52.95 47 45India 38.77 42.11 66 62Sri Lanka 38.25 38.65 67 67Pakistan 35.15 37.89 70 68

The average score for the Asia Pacific region is 53.20, which is slightly above the global average score of 52.22.

Some country scores have remain unchanged but the country ranking has deteriorated due to the improvingposition of other countries while other scores have been adjusted downwards due to modified information onthe market infrastructure or processes.

Thomas Murray provides a full analysis and explanation of the country CSIRR to subscribers of our services. Theanalysis includes a review of the depositories operating in the home market and the improvements that couldbe undertaken that would improve the CSIRR scores.

Luxury sea villas at PulauPangkor Laut Resort, on the tiny,

privately owned island of PangkorLaut, are lapped by the emerald-

green waters of Royal Bay.