Page 46 - Introduction To Investment Management

What is CDS account?

• CDS will allows investors to buy and sell shares

• It is something like a bank account – where investors keep shares in CDS
accounts.
• Investors are allowed to open more than one CDS account

• there are two types of CDS accounts: direct and pledge

• Direct Account, investors will receive the dividend checks and prospectus
mailed to their house.

• Nominee Account, the stockbroker will receive the dividend pay-out and
prospectus on investor’s behalf. Then the stockbroker will bank into

investors account. The disadvantage of nominee account are investors are
not eligible to apply for IPO and may not receive the annual report easily.

ii. To start trading, investor needs to give the stock name or code, stock units and

price to their remiser. The remiser will key in the requested stock in the system
(e.g., WinScore system for order routing).

iii. Once the order matched and confirmed, the remiser will inform their client.
iv. Buyer’s account will be credited on T+3. If there is not enough fund available, the

stock broking company will force sell the bought share on T4 and the buyers’

obligation to bare any loss being made by that transaction.
v. The broking house will then send out contract notes for every transaction of
buying, selling and contra.

46