The Central Depository System

Abstract

Malaysian Central Depository Sda Bhd (MCD), a subsidiary of Kuala Lumpur Stock Exchange (KLSE), was incorporated on 14 April 1990, to operate the Central Depository System (CDS) in Malaysia. LSE is the premier stock exchange in Malaysia. As at 31 December 1993, it had a market capitalisation of RM 619 Billion (USS 238.1 Billion) easily making it the largest bourse in the region. In 1984, KLSE set up a centralised Clearing House called Securities Clearing Automated Network Services Sdn Bhd (SCANS), doing away with the clearing and settlement of scrip on an inter-broker basis. KLSE replaced the traditional open-outcry system of trading with a semi-automated trading system called System on Computerised Order Routing and Execution (SCORE) in 1989. SCORE was further enhanced into a fully automated system and implemented for all securities on 30 November 1992. In an effort to improve the clearing and settlement system, the Daly Netting System (DNS) and the Fixed Delivery and Settlement System (FDSS) were: introduced from 1 January 1990 and 12 February 1990 respectively. In line with developments in the securities industry worldwide and in the wake of the increasing trading volume on the local bourse, there is a need to replace the existing clearing and setlement system which involves physical movement of scrip with a Central Depository System or a “scripless trading” system.