The Securities Depository Center of Jordan (SDC) participated in the 29th annual conference of the International Organization of Securities Commissions (IOSCO) held in Amman between 17-20 of May. The SDC also met with a number of Arab and foreign delegations at the SDC headquarter in the Capital Market Building where these delegations were briefed on the unique Jordanian experience in establishing a securities depository in accordance with International Standards and Best Practices. A number of delegations, including companies specialized in developing trading, clearing and settlement software, expressed their interest in the Jordanian efforts in restructuring the Capital Market and especially in the electronic systems developed.

The SDC is a public utility institution established in the Kingdom by virtue of the Securities Law No (23) of 1997. The Securities Law of 1997 separated the functions of the Amman Financial Market (AFM) and created the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE) and the Securities Depository Center (SDC).

The SDC commenced operation in May 1999 and is the only entity in Jordan that is legally empowered to oversee the following responsibilities: registration of securities, deposit of securities, transfer of ownership and safekeeping of securities, and clearance and settlement of securities transactions.

In cooperation with the JSC and the ASE, the SDC has been assigned the task of bringing about a quantative leap in market efficiency. Since 1999 the SDC has implemented state-of-the-art systems including automated registry, depository and clearing and settlement systems that are compliant with international standards and best practices as well as with G-30 recommendations. Implementation of these systems provides domestic and foreign investors with the highest possible assurance that the clearing and settlement of executed securities trades is efficient, transparent and cost-effective. The globally compliant levels of operational reliability and safety provided by the SDC systems have significantly increased public and investor confidence in the Jordanian capital market and have attracted increased retail and institutional capital investment from across the globe.

As key component in the modernization of the capital market, the SDC is implementing a delivery-versus-payment (DVP) settlement protocol. DVP, a globally recommended settlement methodology, ensures the simultaneous delivery of securities against final payment of funds. In order to provide for the orderly and practical implementation of DVP, the SDC has developed a multi-stage implementation plan. At the first stage of implementation the SDC established a Central Registry to track securities transactions at the account level. As a result, the SDC currently maintains all issuer shareholder books in a unified and efficient manner.

The SDC also developed “Securities Central Operation Registry Processing & Information Online (SCORPIO)” system. SCORPIO, an SDC-designed and implemented system, is bilingual and it provides a complete solution for the registration, deposit and protection of shareholder assets. SCORPIO consists of a number of systems and modules for registration, depository, clearing and settlement and also provides mechanisms for the risk management and surveillance of clearing and settlement. Its modules include Brokers, Issuers, Custodian, JSC Surveillance and Auditing systems, which together enable the SDC to provide investors with a wide range of services.
SCORPIO complies with international standards and best practice. The system connects all participants through the wide area network (WAN) already in place in the Jordan capital market. In the future it will be possible to link SCORPIO with any trading system because of the system’s STP (straight through processing) module. SCORPIO can also provide cash settlement in multiple currencies.

During the first quarter of 2004, the SDC completed another important stage in the overall implementation of DVP. Operational procedures were finalized and the testing completed for online communications with the Central Bank of Jordan’s Real Time Gross Settlement System (RTGS) in preparation for providing enhanced cash settlement measures for DVP settlement. The SDC’s linkage to the RTGS will materially decrease the levels of settlement risk and significantly increase risk management capabilities for participants in the Jordanian capital market.

As part of its future plans, the SDC will introduce bond processing, securities lending and borrowing and a new version of the pledge and lien system. Also, the SDC is designing smart card communications that will allow individual shareholders, both inside and outside Jordan, to view their holdings and the transactions carried out by their financial brokers. In the longer term, the SDC plans to offer market activity analysis, portfolio valuation and Mark-to-Market services.

The SDC’s transformation from chalkboards and paper stock certificates to state-of-the-art technological systems is a remarkable one. Since its inception in 1999, the SDC has seen a five-fold increase in securities trading volumes and has realistic expectations of continued growth in the future. The SDC is committed to the principles of continuous improvement in advancement of its mission to be an integral part of a transparent, viable, fair, and efficient equities market in Jordan that will inspire domestic and international investor confidence, and contribute to the wealth of the nation.

It is worth noting that the SDC also participated in the prestigious World Economic Forum held at the Dead Sea between 15-17 of May as part of the Jordan Capital Market Delegation. Attendance at the Forum enhanced the reputation of the Jordanian Capital Market by raising the visibility of the Market’s commitment to investor protection and demonstrating the effectiveness and efficiency of the Market’s electronic support systems. Participation in the Forum also furthered the Capital Market’s strategic goal of increasing international indirect investment in Jordan by attracting global investors.