Separate Safekeeping of Securities
Separate safekeeping is a special type of custody based on a separate safekeeping contract between clients and KSD. KSD holds the securities of the clients (contractees) separate and apart from other clients' securities under this contract.
Eligible securities and account opening
- Securities under the Financial Investment Services and Capital Markets Act and non-uniform securities certificates can be placed under separate safekeeping.
- A separate safekeeping account can be opened individually for a corporation, its branches or offices. The separate safekeeping service is available through KSD's Head Office in Busan, Seoul Office, and branches (Daejeon and Gwangju).
Procedures for separate safekeeping
Separate safekeeping is a bailment contract under the Civil Law between clients and KSD. Therefore, if certain requirements are satisfied, the details of the contract can be set freely under the principle of freedom of contract. However, compulsory separate safekeeping will have restrictions on the conclusion of the contract and the details.
- General separate safekeeping
There are no restrictions on the period or purpose since it is a free contract between the client and KSD. Accordingly, clients may withdraw the deposited securities at any time.
- Compulsory separate safekeeping
The purpose of compulsory separate safekeeping is to protect retail investors from sharp drops in share prices. Under certain circumstances, securities are compulsorily kept in KSD for a given period of time in accordance to related rules.
Deposit of mandatory holdings
- Compulsory separate safekeeping is converted to deposit of mandatory holding in the deposit system. When a securities company opens an account at KSD for deposit of mandatory holdings, KSD deposits the securities separately for each holder and puts a restriction on transactions for a certain period of time.
- The benefits of this system is that it saves the cost of issuing physical securities certificates, and enhances the efficiency of managing the securities since the risk of loss and theft is eliminated.