Ref. : 6390/2024
Date: 29/07/2024

Memo    No.
(2024/48)

Members of SDC of Brokers and Custodians
Dear General Manager,

Subject: Financial Settlement for Block Trades on the trading date (T+0) on the basis of (DvP)

Greetings,

It’s known that the current procedures taken by the Securities Depository Center (SDC) in the context of settling trading contracts for block trades executed on the Amman Stock Exchange (ASE), are limited to authenticating the ownership transfer for these block trades in the records and accounts of the owners of the securities on the settlement date (T+2) based upon the daily trading files received electronically by the (ASE). The SDC is not interfering in the financial settlements for this type of trading contracts, which are currently taking place between the concerned financial brokers and on their full responsibility in direct confrontation with their clients.

Based on the responsibility of the SDC to develop its operations and services with the aim of enhancing investors’ confidence in the operations and procedures of the Jordanian capital market and reducing the risks arising from trading in securities and settling their prices, and whereas the SDC is considered, under the provisions of the Securities Law, the only entity authorized in the Kingdom to conduct clearing and settlement operations for securities traded on the (ASE) on the basis of delivery versus payment (DvP), in line with international standards and best practices followed in capital markets.

In accordance with the provisions of Article (90) of the Instructions for Registration, Deposit and Settlement of Securities for the year 2017 which stipulates the following:

A.  As of the date determined by the Center, the Center shall carry out Financial Settlements for all Block Trades executed in the Market unless the two selling and Buying Brokers agreed prior to execution to settle the Block Trade directly between them without the intervention of the Center and without holding the Center responsible thereto.

B. Notwithstanding the provisions of Article (51) of these instructions, the Settlement Day for all Block Trades shall be on the same trade Day (T+0).

Following the workshop held by the SDC on 06/05/2024 in the Hall of His Majesty King Abdullah II in the Jordan Capital Market Institutions Building, for the purpose of informing you about the project and reviewing the work mechanism under which the financial settlements of our block trades will be implemented all legal, procedural and technical aspects of this project.

We would like to inform you that the SDC has completed setting up the technical and procedural environment necessary to implement financial settlements for block trades on the same trading day (T+0) to ensure that the seller and buyer brokers agree the settlement through the SDC in accordance with controls that limit the risks associated with these operations by designing and developing technical mechanisms of electronic systems to verify the availability of the balance of securities subject to the transaction and that it is free and not burdened by any restriction preventing disposal and that it is immediately deliverable, in addition to verifying the transfer of the cash balance necessary to purchase those securities to the SDC’s settlement account at the Central Bank of Jordan in advance to implement the transaction at the ASE, After receiving the daily trading files, the necessary measures are taken to complete the process of transferring ownership between the relevant accounts and completing the financial settlements related to them on the same trading day, therefore, the settlement day for all block trades is the trading date (T+0).

Based on the above, we would like to inform you that the SDC will start, as of Sunday 04/08/2024, implementing financial settlements for block trades executed on the ASE, for which the selling and buying brokers agree the settlement through the SDC according to the principle of delivery versus payment (DvP) and completing the procedures for transferring ownership of securities for all block trades between the concerned accounts on the same trading day (T+0) based on the provisions of Article (90) of the Instructions for Registration, Deposit and Settlement of Securities for the year 2017.

Accordingly, the electronic financial brokers system has been prepared for the purpose of implementing financial settlements for block trades, as the functional features of the system will be activated for this purpose as of 04/08/2024. Attached is the functional guide for the project on the electronic financial brokers system.

Kind Regards,

Sarah Tarawneh
Chief Executive Officer

Attachment: Functional Guide