Date: 12/01/2005

In a joint press conference held by the capital market institutions on Wednesday 12, 2005, the CEO of the Securities Depository Center (SDC) thanked the press for their continuous support and cooperation with the SDC and highlighted the SDC’s most important developments and accomplishments during last year.

The SDC successfully transferred the shareholders’ registers of public shareholding companies and deposited the authenticated part of those registers starting December 31, 2004. The depositing process was conducted in specific measures to guarantee the rights of all parties concerned. The shareholders’ registers were divided into the deposited register under the SDC jurisdiction and the non-deposited register under the jurisdiction of the public shareholding company. With the depositing of securities, all shareholder certificates were deemed cancelled, noting that (33%) of the shareholders were deposited at the SDC who represent (160,359) shareholders. These shareholders own (90%) of the issued shares with a total value of (12) billion Dinars. The number of identified accounts at the SDC was (100,000) account established for (76,000) investors of (72) nationality.

The SDC has also completed the final phase of its development; i.e. the implementation of clearing and settlement on the basis of Delivery versus Payment (DvP). DvP is an important International Standard applied in capital markets where the delivery of sold securities is against payment of their value. For this purpose the necessary legislative framework was put in place for this phase where the selling broker should make sure that the shares to be sold by him are in the selling client’s account under his jurisdiction and that these shares are not subject to any ownership restriction (pledge, lien).

Cash settlement measures executed directly through the SDC have also been applied where for the first time such a process is conducted through a capital market institution and under its direct supervision. The SDC conducts the clearing process and notifies the brokers of the amounts to be paid /received by them. The amounts to be paid by the brokers are divided to the Liquidity Reserve amount and the settlement amount. Cash settlement is effected by receipt and payment of the amounts that represent the value of sold securities from/to brokers through bank transfers between the brokers’ accounts at their banks and the SDC settlement account at the Central Bank of Jordan (CBJ) through the RTGS-JO. The SDC has become an indirect member of this system.

The CEO further emphasized that to reduce settlement risk, the Settlement Guarantee Fund By-Law was enforced starting December 31, 2004. The fund’s objective is to cover the buying member’s cash default and the selling member’s securities default as a result of trades executed in the market. Stringent measures were also put in place to penalize brokers who do not fulfill their obligations to settlement such as suspending the broker from trading and imposing fines. All with the objective of effecting settlement within specific timeframe.

The CEO stated that the SDC became the only entity authorized to place and release pledges on securities where only securities deposited at the SDC can be pledged and the pledge is not effective unless authenticated in its registers. The SDC offers this service to protect the rights of both the pledgor and the pledgee and to encourage banks and investors to do lending and borrowing backed with securities which in turn will increase investments in securities.

The SDC also places and releases liens on deposited securities in accordance with the decisions of competent authorities while public shareholding companies remain responsible for imposing and releasing such restrictions for non-deposited securities.

The CEO mentioned that the SDC has paid special interest to investors by providing new services to enable them to obtain several statements and reports that specify their investments and the distribution of securities in different accounts maintained by members. The SDC introduced the freezing service where an investor may freeze his securities in the SDC’s central registry to prevent others from disposing of his securities.

During 2004, the SDC also authenticated the changes made by issuers and this included corporate actions such as mergers increase/decrease of capital.

In light of the issuance of the Securities Law No. (76) of 2002, the SDC, with the approval of the Jordan Securities Commission, issued a number of internal by-laws and instructions to complete the legislative and organizational framework for the SDC’s responsibilities and operations. Most noteworthy of which are the Instructions of Registration, Deposit and Settlement of Securities which outlined the terms of depositing securities, clearing and settlement measures and other related issues.

The SDC’s Internal By-Law was also issued which highlighted all the measures and provisions related to the SDC’s general assembly, board of directors and CEO, their responsibilities and authorities; in addition to other organizational matters. The Internal By-Law of Membership and Code of Conduct was also issued which specified the conditions and requirements for membership and the standards of professional conduct. The By-Law specified the cases in which membership is terminated and the procedures adopted in cases of termination. The By-Law also set the standards of professional conduct that the SDC members must follow. The Internal By-Law of the SDC’s Proceeds which specifies the SDC revenues and the Internal by-Law of the Settlement Guarantee Fund were also issued.

The CEO also stated that the SDC continued to introduce further developments to its SCORPIO system to comply with the requirements of each development stage. The SDC has registered the trademark of the system at the Directorate of Industrial Property Protection at the Ministry of Industry & Trade and the Department of the National Library.

SCORPIO is considered a complete system for registration, depository, safekeeping and transfer of securities ownership, in addition, it provides mechanisms for risk management, surveillance and supervision of clearing and settlement. SCORPIO is compliant with International Standards.

On the internal level and to enhance cooperative relations, the SDC has participated in a number of conferences and workshops related to capital markets and other related issues. The SDC attended the general assembly meetings of the Association of National Number Agencies (ANNA) as a member and the EMEA Forum organized by Atos Euronext in Casablanca. The SDC also participated in the 29th annual conference of the International Organization of Securities Commissions (IOSCO) held in Amman.

SDC representatives participated in the Jordan capital market delegation that visited the headquarters of AtosEuronext in Paris to view the latest trading and settlement systems. In addition, the SDC attended a number of workshops and presentations on corporate governance. The SDC also received a number of Arab and foreign delegations to introduce them to the Jordanian efforts in building the SDC and the electronic systems developed.

He also mentioned that the SDC has updated its website to include information and statistical data that interest investors and other market participant. The SDC continuously updates the information and data on its website to educate the investors and the public.

The CEO emphasized that the positive and continuous cooperation with the Jordan Securities Commission has had fruitful results to the services provided by the capital market institutions which has enhanced confidence in procedures and strengthened protection of investors in this market.

In the end, the CEO affirmed that the SDC has succeeded in accomplishing a quantative leap in the Jordan capital market through the measures and initiatives that were applied last year and the beginning of this year. These measures are in compliance with international standards and have enhanced efficiency and transparency in the market and provided further protection to investors which in turn increased their confidence and investments in the market.