Financial Settlements
التاريخ
Ref. : 8/9/9775
Date: 17/10/2004
Date: 17/10/2004
Memo No.
(12/ 2004)
Brokers, Member of the Securities Depository Center
Subject: Financial Settlements
The Securities Depository Center (SDC) will enforce the Internal By-Law of the Settlement Guarantee Fund of 2004 and cash settlements for trades executed at the market before the end of the year 2004. This requires all brokers to adjust their situation in accordance with the By-Laws and Instructions issued by the SDC.
The Instructions of Registration, Deposit and Settlement of Securities of 2004 especially sub-section two of section two of chapter four specified all the measures related to cash settlements performed by the SDC including time frames that the broker must abide by when paying the due amounts as Liquidity Reserve and the Settlement Amount due to be paid by the broker on settlement date.
The SDC will implement cash settlement measures directly for trading contracts executed on all securities traded in the first and second market of the Amman Stock Exchange (ASE) excluding the special deals performed in special sessions and the bonds market. Cash settlements for special deals and bonds will be conducted directly between the concerned brokers without the SDC’s interference in accordance with the current procedures.
The Internal By-Law of the Settlement Guarantee Fund of 2004 determined the brokers’ obligations to the Fund which represents an unconditional bank guarantee and cash contribution in addition to a one time paid association fee and an annual subscription fee.
Consequently, and since cash settlements performed through the SDC depend on the receipt of the value of securities and payment from/to brokers by bank transfers between brokers’ bank accounts and the SDC’s Settlement Account at the Settlement Bank, it is required that each broker open one bank account for cash settlement purposes and inform the SDC of that account and any changes that occur to it.
Therefore, the SDC requests all brokers to arrange their status according to the above, and notify the SDC of the following by Wednesday November 24, 2004:
The Instructions of Registration, Deposit and Settlement of Securities of 2004 especially sub-section two of section two of chapter four specified all the measures related to cash settlements performed by the SDC including time frames that the broker must abide by when paying the due amounts as Liquidity Reserve and the Settlement Amount due to be paid by the broker on settlement date.
The SDC will implement cash settlement measures directly for trading contracts executed on all securities traded in the first and second market of the Amman Stock Exchange (ASE) excluding the special deals performed in special sessions and the bonds market. Cash settlements for special deals and bonds will be conducted directly between the concerned brokers without the SDC’s interference in accordance with the current procedures.
The Internal By-Law of the Settlement Guarantee Fund of 2004 determined the brokers’ obligations to the Fund which represents an unconditional bank guarantee and cash contribution in addition to a one time paid association fee and an annual subscription fee.
Consequently, and since cash settlements performed through the SDC depend on the receipt of the value of securities and payment from/to brokers by bank transfers between brokers’ bank accounts and the SDC’s Settlement Account at the Settlement Bank, it is required that each broker open one bank account for cash settlement purposes and inform the SDC of that account and any changes that occur to it.
Therefore, the SDC requests all brokers to arrange their status according to the above, and notify the SDC of the following by Wednesday November 24, 2004:
| 1. | The bank account number of the broker for the purpose of paying and receiving securities value. |
| 2. | Sign the attached acknowledgement form regarding the brokers’ commitment to abide by the SDC’s By-Laws and Instructions as stated in Article (82/H) of the Securities Law No (76) of 2002, where only an authorized person may sign and stamp it on behalf of the company. |
Upon enforcement of the Internal By-Law of the Settlement Guarantee Fund of 2004, the SDC shall provide brokers with the following:
| 1. | The amount of the bank guarantee which the broker shall issue according to the enclosed form. |
| 2. | The amount of the cash contribution that the broker shall pay to the Fund. |
| 3. | The SDC Settlement Account Number at the Settlement Bank. |
Please note that as stated in sub-section three of section one of chapter four of the Instructions of Registration, Deposit and Settlement of Securities of 2004, regarding suspended contracts, the SDC shall seize the value of the suspended contract, this necessitates that brokers make sure that the number of securities registered in the client’s account with the selling broker is sufficient to execute the sale.
In the end we would like to emphasize that brokers must abide by the by-laws and instructions issued by the SDC and inform their banks of the necessity to abide by the time frames determined for cash transfers to the Settlement Account at the Settlement Bank. The bank transfers must contain all the required information and data to protect the rights of all the concerned parties and for the efficiency of the cash settlement measures for trading contracts.
Thank you for your cooperation for the benefit of the Jordan capital market.
Samir Jaradat
Chief Executive Officer
