leanidich
04-09-2010, 06:58 AM
An investor intending to pledge his securities will have to enter into a written agreement with the lender. The depository participant is not a party to this agreement or contract. The depository participant is only acting on the instructions of the investor. However, it is possible that the lender and the depository participant are the same. We can explain this with an example.
Suppose Mr. A has a depository account with ‘Orbit Limited”. On 2 February 2010, he approached ‘Citi Bank’ for a loan. ‘Citi Bank’ agrees to extend a loan of 2,00,000 dollars payable on March 2, 2010 against say 500 shares of Microsoft. Mr. A agrees to the terms and conditions of the loan and signs an agreement.
Mr. A will execute an agreement with ‘Citi Bank’. He will then give an authorization to ‘Orbit Limited’, his depository participant to record the lien on his securities. 'Orbit Limited' will arrange to send the instructions to the regulatory authority to record the lien on account of ‘Citi Bank’. The regulatory authority will record the lien and the message will be transmitted to ‘Orbit Bank’. The process of communicating the relevant information to the regulatory authority and ‘Citi Bank' takes place simultaneously.
The best online stock trade (http://www.worldtradesource.com/) platforms actually offer streamlined services. Selling and buying shares is not at all that much difficult when trading using such platforms. Another interesting option is that a trader or customer can even invest in shares listed in stock markets in foreign destinations. While the stock markets in the advanced countries have reached a point of saturation, the developing countries are now witnessing a boom like never before.
Consider the developments in Sri Lanka. After the end of the ethnic conflict the financial market has undergone a major makeover. From obscurity, the stock exchange in Colombo is now the cynosure of all eyes not only due to the continuing boom but also due to the inflow of investments from abroad. The Sri Lankan finance department has now totally overhauled the stock market to make the financial sector more buoyant.
Suppose Mr. A has a depository account with ‘Orbit Limited”. On 2 February 2010, he approached ‘Citi Bank’ for a loan. ‘Citi Bank’ agrees to extend a loan of 2,00,000 dollars payable on March 2, 2010 against say 500 shares of Microsoft. Mr. A agrees to the terms and conditions of the loan and signs an agreement.
Mr. A will execute an agreement with ‘Citi Bank’. He will then give an authorization to ‘Orbit Limited’, his depository participant to record the lien on his securities. 'Orbit Limited' will arrange to send the instructions to the regulatory authority to record the lien on account of ‘Citi Bank’. The regulatory authority will record the lien and the message will be transmitted to ‘Orbit Bank’. The process of communicating the relevant information to the regulatory authority and ‘Citi Bank' takes place simultaneously.
The best online stock trade (http://www.worldtradesource.com/) platforms actually offer streamlined services. Selling and buying shares is not at all that much difficult when trading using such platforms. Another interesting option is that a trader or customer can even invest in shares listed in stock markets in foreign destinations. While the stock markets in the advanced countries have reached a point of saturation, the developing countries are now witnessing a boom like never before.
Consider the developments in Sri Lanka. After the end of the ethnic conflict the financial market has undergone a major makeover. From obscurity, the stock exchange in Colombo is now the cynosure of all eyes not only due to the continuing boom but also due to the inflow of investments from abroad. The Sri Lankan finance department has now totally overhauled the stock market to make the financial sector more buoyant.