This section stipulates the procedures to be complied with by DPs with respect to:
1. Pledge of securities already deposited in the CSD,
2. Release of pledge upon termination of the pledge, and
3. Sale on default of securities pledged in the CSD.
11.1 PLEDGE IN THE CSD
11.1.1 The Investor will hand over duly completed and signed Securities Pledge Form CSD 6 to his DP.
11.1.2 The DP will verify instructions and signature of investor and will acknowledge receipt of the pledge request by returning to the investor relevant copies of the Pledge Form duly signed.
11.1.3 The DP will forward the completed and duly signed Securities Pledge Form to the CSD not later than 4:00 pm.
11.1.4 The CSD will check whether the information provided in the pledge documents are in conformity with the Rules and Procedures and the securities being pledged qualify according to the conditions in the Pledge Form.
11.1.5 The CSD will reject incomplete pledge documents, stating reasons for rejection and return the pledge document to the DP.
11.1.6 The CSD will record the pledged Securities and will freeze the securities in the pledgor‟s account.
11.1.7 The CSD will confirm to the pledgee‟s and the pledgor‟s DP the completion of the pledge by forwarding a copy of the Securities Pledge Form, to each duly signed.
11.2 REPO TRANSACTION SETUP IN THE CSD
11.2.1 The Borrowing/Assignment DP will forward to the CSD by 4:00 pm on T, in triplicate, REPO Transaction Documents duly signed by the Authorized Signatoriesof the DP.
11.2.2 Upon receipt of the REPO Transaction Documents, the CSD will verify the authorized signatures on the REPO Transaction Documents and check whether the information provided in the documents are in conformity with the Rules and Master REPO Agreement. CSD will also check if the securities being
charged qualify according to the conditions governing REPO Transactions.
11.2.3 The CSD will reject incomplete REPO Transaction Documents, stating reasons for rejection and return the REPO Transaction Documents to the DP.
11.2.4 The CSD will capture the REPO Transaction into the CSD system.
11.2.5 The CSD will confirm to the pledgee and the pledgor the completion of the REPO Transaction by forwarding a copy each of the REPO Transaction Documents duly signed and stamped by the CSD.
11.3 RELEASE TO PLEDGOR (FOR PLEDGES AND REPO TRANSACTIONS)
11.3.1 CSD shall release the pledge in favour of the pledgor by 4:00 pm. on the said release date in accordance with the Rule and the securities will be eligible for any other transaction thereafter.
11.3.2 Where there is a default or any other reasons, the pledgee shall forward through his DP to the CSD before the release date, instructions not to release a pledge.
11.3.3 Where there is a reason for an early release of a pledge, the pledgee shall forward through his DP to the CSD, instructions to release the pledge in favour of the pledgor before the release date.
11.4 SALE ON DEFAULT OF SECURITIES PLEDGED/CHARGED IN THE CSD
This section pertains to foreclosure by the pledgee on securities, which have been pledged in the CSD. Upon receipt of a request for foreclosure on pledged securities, CSD will release the pledge and make the securities available in the Securities Account of the pledgee for sale, clearing and settlement purposes. The release is effected only upon confirmation of the sale by the executing DP appointed by the pledgee
11.4.1 The pledgee DP will forward a letter requesting foreclosure or sale on default to the CSD after verifying the details and signatories.
11.4.2 Prior to effecting the sale through its DP, the pledgee will give sufficient notice to the pledgor as required by any applicable law or agreement and inform the CSD of such notice. CSD will issue a letter to the pledgor notifying the pledgor that the securities are being released for sale by the pledgee.
11.4.3 The executing DP will inform CSD immediately after the securities are sold. CSD will then release the pledge and transfer the securities to the Securities Account of the pledgee for clearing and settlement purposes. The executing DP will allocate the sale to the pledgee‟s Securities Account.
11.4.4 The pledgee shall be required to indemnify the CSD in the event of any wrongful Sale on default.
