A CDC account is an investor account directly opened and maintained with the Central Depository Company (CDC). Think of it as an account where you directly hold your securities, similar to how a sub-account functions when managed through a broker (Participant).
Here's a more detailed explanation:
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Direct Ownership: A CDC account allows investors to directly hold their shares (or other securities) electronically with the Central Depository Company. This eliminates the need to have a broker hold them on your behalf.
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Central Depository Company (CDC): The CDC acts as a central repository for securities. It facilitates the electronic transfer and settlement of securities transactions.
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Analogy to Broker Accounts: Consider the common scenario where you open a trading account with a brokerage firm (Participant). The shares you purchase through that brokerage are held in a sub-account maintained by the brokerage with the CDC. A direct CDC account bypasses the brokerage intermediary, placing you in direct contact with the central depository.
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Functionality: A CDC account provides facilities for things like:
- Depositing securities.
- Withdrawing securities.
- Transferring securities.
- Receiving corporate action benefits (e.g., dividends, bonus shares).
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Benefits: Some potential benefits of a direct CDC account can include greater control over your holdings and potentially lower fees, depending on the specific fee structure of the CDC compared to a brokerage firm.
In summary, a CDC account gives investors direct access to the electronic securities holding and transfer system managed by the Central Depository Company, providing an alternative to holding securities through a broker.
