Sunday, March 6, 2011

Shares in CDP

Hi Mr Tan,
I have just started investing in stocks. I read that our shares and other form of securities are held under the custody of CDP. I am curious about how safe are our shares in the custody of CDP. I read from the CDP website that they are not liable for any loss, destruction or mis-delivery of any Securities, any fraud or forgery in connection with the Depositor’s signature, instructions or requests etc.


Does this means that they are not responsible should any fraud, forgery or other forms of damages that happened? If that's the case how do retail investor prevent this from happening and does it help to have a securities account operated with a thumb print? I feel that other investors would be interested to have some knowledge on this issue as well. I sincerely hope that Mr tan you can shed some lights on this issue.

REPLY
I have kept all my shares in CDp for 20 years and have no worry about this matter. I have also not heard of any problem with the security of the shares of other investors. Most transfers are now done electronically and are backed by an actual sale made through a broker.