LAHORE, Oct 9: The main objective of the Securities and Exchange Commission of Pakistan (SECP) is to pursue the development of capital market and Central Deposit Company (CDC) is playing an important role in this regard.

This was stated by SECP Commissioner Abdul Rehman Qureshi while speaking as chief guest at the inauguration of the "Deposit Functionality" introduced by CDC in its Investor Accounts Services (IAS) at Lahore Stock Exchange on Saturday.

"Previously, de-materialization from physical securities to electronic securities was done through a stockbroker or a financial institution but from now onwards the investors would be able to deposit their securities directly into their investor account", he said.

He said this facility was introduced in Karachi in July this year and hoped that it would be introduced in Islamabad soon.

He said though capital market had achieved a remarkable growth in the recent time yet the retail investor base in the country was still under-developed.

"Despite the fact that the basic infrastructure for a vibrant capital market is in place, the market remains narrow with thin investor base, as approximately 35-40 scrips account for 95 per cent of the total market capitalization."

"There is need to find ways and means to deepen the capital market and bring a larger number of retail and institutional investors in the market", he stressed.

Appreciating the role of CDC in promoting capital market, he said that the CDC has played a significant role as a facilitator in the capital market and over the years it has emerged from an elementary settlement agency to a full-fledged depository.

"However, it is important that CDC should extend its services to other parts of the country as soon as possible", he said.

He urged brokers to attract investors and establish offices in different cities. He also suggested that small investor be allowed greater access to the market through the development of Internet/ on-line trading facilities etc.

CDC Chief Executive officer Hanif Jakhura said with the new service, investors would have complete control over de-materialization of their physical securities.

"This will not only reduce burden of deposit requests on the participants, but also offer cost-effective and efficient service to the investors," he added.

He said CDC has come a long way since commencing operations in 1997 and has introduced countless number of services including live operations of CDS, TFC's inclusion in the Central Depository System, Electronic mergers, Trustee services, Paid Rights facility and complete implementation of National Clearing and Settlement System.

He said the CDC had cut down its tariff rates substantially over the years to deliver the benefits of the electronic system to the investors. Transaction fee was brought down by 73 per cent to Rs0.0027 from Rs0.01.

Similarly, the transaction fee for IAS was reduced by 73 per cent to Rs0.0054. IAS annual fee was also reduced by 50 per cent to Rs1,500, he said.

He said CDC played a vital role in increasing the average daily turnover of stock exchange adding that before CDC trading, over a few million shares were a big problem due to manual settlement whereas over one billion shares have been traded on a given day smoothly.

About the CDC's future plans, he said it included induction of units of open-ended mutual funds, outsourcing of investor account services, securities lending\borrowing, share registrar services and web-based CDS.

CDC Chairman Muhammad Basheer Jan emphasised the need for privatization of mega projects like KESC, PSO and further disinvestments of PPL, Sui Southern, Sui Northern, OGDC, National Bank and other units presently in control of the government.-APP