Mr. Faris Sharaf the Deputy Governor of the Central bank of Jordan (CBJ) and Mr. Samir Jaradat the Chief Executive Officer of the Securities Depository Center (SDC) signed an agreement between CBJ and the SDC yesterday at the CBJ headquarters whereby the CBJ has been assigned as the settlement bank through which cash payments resulting from securities trading will be settled via the “RTGS-JO” System. This will enhance fairness, speed and accuracy of bank transfers, which will occur simultaneously with the transfer of sold securities.

A Settlement Account was established for the SDC at the CBJ which will be used for the purposes of receiving payments and paying the amounts representing the value of securities from and to brokers through bank transfers between the broker’s account at his bank and the SDC Settlement Account at the CBJ in order to settle the value of trading contracts executed on securities traded in the first and second market of the Amman Stock Exchange (ASE) on the basis of Delivery Versus Payment (DvP). DvP is the one of the most advanced and recent recommendation by the Group 30 and is a major International Standard that should be adopted by all capital markets.

The account operates by instant settlements on the same working day in which the receipt and payment orders are received. This will enhance the efficiency of the cash settlement cycle between brokers that are licensed by the Jordan Securities Commission (JSC) and operate in the ASE, where in turn the settlement cycle will be moved from (T+4) to (T+2) starting from the first trade date of January 2005.

The broker’s bank pays the broker’s obligations resulting from trading at the ASE through issuing Swift Message Type 202; in addition, the amounts due to the broker are paid through the RTGS-JO.

DvP will be implemented through the SDC’s Settlement Account at the CBJ starting trading on Sunday, January 2, 2005, subsequent to transferring shareholder registers and depositing authenticated securities at the SDC.

The CBJ and the SDC have fulfilled all the technical requirements to link the RTGS-JO with the SDC’s electronic system “SCORPIO”.

Assigning the CBJ as the settlement bank, whereby receipt and payment of the value of traded securities from and to brokers’ accounts at their banks has simplified the settlement procedures and reduced the risks associated with cash settlement, which in turn enhances investor confidence and ensures the cooperation of the capital market institutions and the CBJ together to implement International Standards efficiently and effectively through adopting the best secured technical communication methods.