Understanding the CDSC: How Settlement, Demat, and Trading Actually Work in Nepal

Understanding the CDSC: How Settlement, Demat, and Trading Actually Work in Nepal

For many new investors in NEPSE, trading seems as simple as buying and selling shares via TMS. But behind every successful trade lies a complex digital infrastructure—the Central Depository System and Clearing Ltd. (CDSC).

From Demat accounts to IPO allotment, E-DIS, and T+2 settlement, CDSC is the invisible engine that powers the Nepali capital market.

In this blog, we’ll break down exactly how CDSC works, what role it plays in NEPSE trading, and how investors can use tools like Mero Share effectively.

🏛️ What is CDSC?

Central Depository System and Clearing Ltd. (CDSC) is the government-licensed central agency responsible for:

• Maintaining Demat accounts (electronic shareholding)

• Handling clearing and settlement of securities traded in NEPSE

• Managing IPO allotments, rights issues, and bonus/cash distributions

• Enabling E-DIS (Electronic Delivery Instruction Slip)

CDSC works in collaboration with:

• NEPSE (for trade execution)

• SEBON (for regulation)

• BOs (Depository Participants) like banks, brokers, and merchant bankers

📦 Step-by-Step: How a NEPSE Trade Actually Works

Let’s demystify the full trade cycle from buy order to share delivery.

🔹 Step 1: You place a buy order via your TMS (broker portal)

• The order goes to NEPSE’s trading engine

• Once matched, the trade is executed (T Day)

🔹 Step 2: NEPSE forwards the trade to CDSC

• CDSC receives trade data

• Starts the T+2 settlement clock

🔹 Step 3: CDSC coordinates clearing

• On T+1 (next day):

  • Buyer arranges payment via broker

  • Seller initiates share delivery via E-DIS

🔹 Step 4: Final Settlement on T+2

• Buyer receives shares in Demat account

• Seller receives funds via broker

📌 T+2 = Trade date plus 2 working days

🧾 What is a Demat Account?

A Demat (Dematerialized) account stores your shares electronically—just like a bank account holds money.

📁 Key Features:

• Every investor gets a unique BOID (Beneficial Owner ID)

• Managed by CDSC through partner institutions (banks, capital firms)

• Needed for IPOs, rights, and trading

💡 You can check your Demat holdings via Mero Share or the CDSC portal.

💻 What is Mero Share?

Mero Share is CDSC’s online portal that lets investors:

• Apply for IPOs/FPOs/rights

• View current shareholdings

• Submit E-DIS to transfer shares after selling

• Track transaction history

🌐 Visit: meroshare.cdsc.com.np

🧾 Common Mero Share Sections:

• My ASBA: Apply for IPOs using your bank account

• My Shares: View Demat share details

• My EDIS: Deliver sold shares to broker

• My Transactions: See share movements (buy/sell/bonus/etc.)

🧾 What is E-DIS and Why It Matters?

E-DIS (Electronic Delivery Instruction Slip) is mandatory after selling shares.

When you sell via TMS, CDSC doesn’t know you’ve agreed to deliver shares. E-DIS is your confirmation to transfer those shares to your broker.

📋 E-DIS Checklist:

• Must be submitted before 11:59 PM on T+1

• If skipped, shares won’t settle, and you'll be penalized

• You can cancel or modify until confirmed

🛠️ Steps:

1. Login to Mero Share

2. Go to My EDIS → Transfer Shares

3. Select Broker, Shares, and Quantity

4. Submit and verify

💡 Always double-check quantity to avoid partial delivery rejections.

🎯 IPO Allotment & CDSC’s Role

CDSC plays a central role in IPO processing, including:

• Centralizing all ASBA (IPO) applications

• De-duplicating multiple applications

• Conducting digital lottery for allotment

• Publishing results on iporesult.cdsc.com.np

• Crediting allotted shares to Demat accounts

⚠️ If you apply from multiple banks or BOIDs for the same IPO, your application may be canceled.

📊 What is Clearing and Settlement?

CDSC settles all trades through a T+2 rolling settlement mechanism:

CDSC also settles:

• Bonus shares

• Right shares

• Stock splits

• Debentures

🧠 Common Investor Mistakes (and Fixes)

🛠️ Tools to Make CDSC Easier

🧭 FAQs About CDSC and Settlement

📌 Is T+2 the same for buying and selling?

Yes. If you buy today, shares arrive on T+2. If you sell, payment is credited on T+2 (after EDIS).

📌 What happens if I don’t do EDIS?

The trade fails, and you might be blacklisted or fined.

📌 Can I use Mero Share on mobile?

Yes. Use a browser (no app yet), or install your capital company’s app linked to CDSC.

📌 What if I forget my BOID?

You can retrieve it from your Demat provider or Mero Share account page.

🔐 Security Tips

• Always change your Mero Share password regularly

• Don’t share CRN or BOID with others

• Log out after every Mero Share session

• Avoid using public Wi-Fi for transactions

🧠 Final Thoughts

The CDSC is the backbone of Nepal’s stock market infrastructure. While retail investors interact mainly through brokers and TMS, every order, allotment, and share movement flows through CDSC systems.

Understanding how settlement, Demat accounts, EDIS, and Mero Share work empowers you to avoid costly mistakes and take full control of your trading journey.

As NEPSE modernizes, digital literacy in platforms like CDSC is no longer optional—it’s essential.