Agent services for overseas securities (CB, BW, EB)
KSD provides conversion agent services for overseas convertible bonds (CBs), for which the issuer must issue new stock when bondholders exercise conversion rights, as well as acting as a warrant agent for overseas bonds with warrants (BW) and exchange agent for exchangeable bonds (EBs). In addition, KSD provides custody for stocks to be exchanged for EBs and performs the role of paying agent.
- Overseas CB conversion agent service
- This diagram shows procedures for overseas CB conversion agent service.
- 1-1 : Bondholder Instructs a Global Custodian to exercise conversion right.
- 1-2 : Bondholder submits conversion notice to KSD
- 1-3 : Bondholder Instructs a Standing proxy to receive stocks
- 2 : Global custodian exercises conversion right.
- 3 : Standing proxy deliver confirmation of conversion notice.
- 4 : Issuers requests CSD to issue stocks.
- 5 : CSD distributes securities to a standing proxy.
- Overseas BW warrant agent service
- This diagram is about procedures for overseas BW warrant agent service.
- 1-1 : A bondholder instructs a global custodian to exercise warrant.
- 1-2 :The bondholder submits an application to KSD for exercising warrant.
- 1-3 : The bondholder instructs a standing proxy to receive stocks and transfer funds.
- 2 : A global custodian instructs KSD to exercise warrant through SWIFT message.
- 3 : The standing proxy pays subscription money to the issuer.
- 4 : A warrant agent delivers confirmation of exercise notice to the issuer.
- 5 : The issuer requests CSD to issue stocks.
- 6 : CSD distributes stocks to the standing proxy.
- Paying agent service for overseas securities
KSD receives and distributes bond principal and interest on behalf of bondholders in case of interest payment dates, exercise of put options by bondholders, and exercise of call options by issuers.
Paying agent service for overseas securities : STEP01, STEP02, STEP03 Step 01 Step 02 Step 03 The bondholder (ICSD) claims redemption of principal and interest from the paying agent. The paying agent requests redemption of principal and interest to the issuer, and receives the funds. The principal and interest received by the paying agent is paid to the bondholder (ICSD).
Benefits of the agent services of foreign securities
- It reduces risk of stock price volatility and provides early liquidity.
The time required for stock issuance and delivery arising from exercising rights on overseas securities is reduced, which shortens the period from warrant (conversion rights) exercise and EB exchange to the selling of shares, enhancing profitability for investors.
- It lessens the administrative work load of issuers, and removes inconveniences caused by different languages and time zones.