Securities Depository Center to introduce Electronic Clearing & Settlement
Date: 29/05/2002
The Securities Depository Center (SDC) is instigating the development of “Electronic Clearing and Settlement” as a transitional step towards the implementation of the principle of Delivery Versus Payment (DVP) as part of the first phase of stage three of the SDC’s development program where cash settlement between brokers for trades executed at the Amman Stock Exchange (ASE) will be conducted directly through the SDC.
After completion of the first two stages of the development plan, client identification and the issuance of electronic deeds, the main tasks of this phase are:
| ● | Check the shareholder register submitted by the issuer to the SDC, making sure of the existence of the unique number for each shareholder, the company’s capital equals the balance of shareholders in the register, the name and nationality of the shareholder, the balance of the shareholder and the date of the balance of the register |
| ● | Upload the register for authenticated and non-authenticated shareholders to the SDC’s electronic systems |
| ● | Maintain statements of accounts for authenticated shareholders and update the statements according to buying and selling transactions conducted through the ASE, the transfer of ownership transactions conducted directly through the SDC and any pledges or liens that are noted by the issuer; however, the shareholders’ registers and the statements of accounts maintained by the issuers will remain the legal proof of ownership of securities in this phase; |
| ● | Check the balance of the sellers in trading transactions against the shareholders’ statements of account to make sure that the shareholders are authenticated, own sufficient securities to execute the trades and there are no ownership restrictions. |
| ● | Issue transfer deeds for all trading transactions including suspended deeds; in addition, the SDC will issue notifications of suspended deeds with such notifications being delivered to the issuer to remedy the reasons of the suspension by the public shareholding company and/or the broker. The broker will be notified electronically by the SDC of its suspended deeds where it will have to rectify the reasons for the suspension within a specified time frame. |
| ● | Notify brokers of the payable/receivable amounts and suspend sale funds that represent the value of suspended deeds where such funds will not be delivered to the selling broker until all reasons of the suspension have been rectified. The method of cash settlement will be determined after adopting the necessary amendments to the SDC By-Laws and Procedures. |
Public shareholding companies should inform the SDC of any changes that occur to its register after its submission to the SDC. When the public shareholding company receives the transfer deeds, it may accept or reject them and return its suspension notification to the SDC with the reasons for the deed’s acceptance or rejection.
Broker must provide the necessary funds to cover all obligations. When brokers are notified of suspended trades and/or rejected deed, they should rectify the reasons for the suspension or rejection.
While investors should make sure that they are in the authenticated register and authenticate all relevant information and data at the issuers in which the investors own securities, the role of brokers in this phase is crucial for the protection of clients. Brokers should make sure that clients are authenticated in the register submitted to the SDC by the company or take all appropriate measures to authenticate clients before entering any selling orders through the Electronic Trading System at the ASE in order to prevent any suspension of the value of the selling transactions for clients.
The Securities Depository Center (SDC) was established by virtue of the Securities Law No (23) of 1997. This Law has given the SDC the task of building a "National Center for Securities" that handles the registration of securities, transfer of their ownership and settlement of their value and their safe-keeping.
