Date: 29/01/2006

2005 was a distinguished year for the SDC towards the achievement of its functions and goals. This year witnessed a number of important developments with the implementation of clearing and settlement on the basis of Delivery versus Payment (DvP). DvP is considered an important international standard applied in capital markets, where delivery of sold securities is against payment of funds.

Ownership of deposited securities was transferred from the selling client’s account with the selling broker to the buying client’s account with the buying broker via book-entries in accordance with the daily trading file delivered to the SDC by the ASE where the securities remained suspended in the buyer’s account until the fulfillment of the settlement measures. The number of trading contracts that were settled by the SDC in 2005 was (2,391,169) where (2,514.4) million shares were transferred with a total value of (JOD 16,153.4) million.

Financial settlements between brokers were conducted through the SDC by bank transfers from the brokers’ accounts to the SDC’s settlement account at the Central Bank of Jordan (Settlement Bank) through the RTGS-JO. The total amounts paid by the brokers from their accounts to the SDC’s settlement account at the settlement bank was (JOD 2,918,501,230.67) of which (JOD 1,707,515,516.88) were paid as liquidity reserve and (JOD 1,210,985,713.79) as settlement amount while the total amounts paid to brokers was (JOD 2,918,501,230.67).

The Internal By-Law of the Settlement Guarantee Fund became effective to cover the cash deficit of a fund member in connection with his purchases of securities and the deficits in the securities account of a fund member in connection with his sales of securities on the market. The contributions of the members of the fund were divided into cash contributions and bank guarantees. The total amount of the members contributions to the fund as of the December 31, 2005 was (JOD 45,165,761) of which (JOD 17,741,761) as cash contributions and (JOD 27,424,000) as bank guarantees. The SDC also applied buy-in measures to guarantee the execution of trades within the specified timeframes. Strict measures were taken against brokers that did not fulfill their obligations to settlement and in some cases were suspended from trading.

The percentage of deposited shareholders at the SDC increased by the end of 2005 where the number of deposited shareholders reached (291,168) shareholder representing (52.79%) of the total number of shareholders equaling (551,578). These deposited shareholders own (3,385,144,304) shares with a percentage of (94.42%) of issued shares and a total value of (JOD 26.6) billion.

In 2005, the SDC executed the identification and account establishment on the SDC’s database of (56,025) investors; thus, the total number of identified investors on the SDC’s database reached by the end of the year (176,703) investors and the number of accounts as of 31/12/2005 was (168,206) account.

The SDC in 2005 registered the shares of (17) new public shareholding companies with a total of (139.8) million issued shares and a nominal value of (JOD 149.3) million. The SDC also registered the bonds issued by the government and public institutions in addition to corporate bonds issued by Jordanian companies.

Since a number of public shareholding companies have increased or decreased their capital or merged during 2005, the SDC registered all new shares arising from the increase in capital due to subscriptions executed by (59) public shareholding companies with a total of (309.8) million shares; in addition to the registration of the shares as a result of capitalization of reserves or profits or capitalization of debts executed by (53) public shareholding companies with a total of (159.3) million shares. The SDC also decreased the number of shares registered at the SDC to (30.1) million shares as a result of (9) public shareholding companies decreasing their capital.

The SDC continued placing ownership restrictions against deposited securities where (5,746) pledge, release of pledge, lien and release of lien were executed on (256,719,479) shares. The SDC also provided the service of freezing securities where the shareholder may freeze his securities in the SDC’s central registry. The SDC placed (25) freeze and (20) release of freeze.

The SDC continued to execute inheritance transfers where securities were transferred from the deceased’s account to the accounts of his rightful heirs in accordance with the documents and papers presented to the SDC. In 2005, the SDC executed (19,447) transfer where (23,075,090) shares and bonds were transferred representing a total market value of (JOD 668,544,394.53). The SDC also executed (2,961) family transfers, where (7,879,918) shares and bonds were transferred representing a total market value of (JOD 139,662,634.34). In addition to non-traded securities transfers and other transfers where the SDC executed (3,296) transfer in which (30,006,528) shares and bonds were transferred representing a total market value of (JOD 131,218,445.19).

The SDC also provided investors with services that enabled them to obtain ownership statements that show their balance in securities and the securities distribution in different accounts. The number of issued statements in 2005 was (4,289). The investor could also obtain transaction statements that show the transactions that occurred to his shares where the number of issued statements was (28) during the same year.

With regarding to technical developments, the SDC continued developing its technical environment and electronic system (SCORPIO). A number of new programs were developed to execute corporate actions such as increase or decrease of capital or subscriptions. In addition, to developing further safety measures programs and new programs necessary to authenticate and validate the SDC database.

In addition, the SDC developed a special system for custodians called the "Custodian System". This system enhanced the role of custodians in the settlement cycle and organized the relationship between brokers and custodians. The custodian used the Custodian System to identify and establish accounts for his clients, safe-keep their securities, transfer deposited securities between accounts, enquire about the movements and balances of his clients deposited securities and release securities to the selling broker and receive securities from the buying broker on behalf of his clients.

The SDC also updated the “Issuers System” -Private Subscription-. This new technical update enabled public shareholding companies to authenticate private subscriptions directly on the SDC database. This reduced time and effort by public shareholding companies in the preparation of the subscribers’ register and avoided mistakes in the preparation of the register; in addition to making the share registration process at the SDC faster and enabled viewing the subscription process directly.

With regard to the local area network (LAN), the SDC finished developing and updating the LAN to raise the intranet to gigabit and increase the security level by using firewalls and improving control tools using Intrusion Dedication Systems (IDS) and raising the communication capacity programs that connect members to the SDC network.

As for the wide area network (WAN), a special committee was established to supervise the capital market network and prepare a study on the status of the network and development possibilities to the network. A tender containing the technical specifications for updating the network update and the submitted tenders were reviewed. The shared equipment in the capital market building and housing bank complex (the Backup Site) were replaced with new and developed equipment to serve the capital market institutions and its members.

Oracle 9i programs on the main servers of the central registry database were updated. A backup server was also added to guarantee the continuity of the operation of the central registry database. In addition, a main server was added to operate  the new SDC website on the internet which will be launched during the first quarter of this year.

The SDC continued providing technical support for its members especially with regard to connection to the SDC’s database and updating the SDC’s electronic systems on the members’ computers; in addition to further issues.

During 2005, the SDC assigned an electronic mailbox for each member and other entities to facilitate and accelerate the process for members in receiving correspondences and circulars in electronic format to allow them to take the necessary measures.

On the cooperation level with external organizations, the SDC participated in a number of meetings and conferences such as the annual meetings of the Association of National Numbering Agencies (ANNA) and the meeting of Federation of Euro-Asian Stock Exchanges (FEAS) in which the SDC became an affiliate member. The SDC also participated in the 8th Conference of Central Securities Depositories (CSD8) that was held in the United Sates of America in which the Africa & Middle East Depositories Association (AMEDA) was established with the aim of enhancing effective cooperation between CSDs and exchanging information and experiences.

In addition, the SDC participated in a number of workshops and seminars especially the workshop organized by the Jordan Securities Commission for Jordanian judges on the legal and legislative aspects of the operations of the capital market institutions. The SDC presented the important technical and legal issues regarding the SDC’s operations. Lectures were also presented to educate and inform the public about the SDC, its operations and the latest developments to its electronic systems and applications.

Since the SDC believes in the importance of sustaining efficient human resources, a number of employees participated in training courses and seminars in management, accounting, computer and languages, inside the Kingdom and abroad; in addition to the training courses and seminars related to the SDC’s operations in particular and the capital market in general.