Date: 09/01/2005

Investors can now look forward to world-class standards of efficiency and security as the Securities Depository Center (SDC) has successfully implemented new procedures for cash settlement starting Sunday, 2 January, 2005. The implementation of these procedures is considered an important step to enhance the efficiency of the Jordan capital market and increase the confidence of investors by reinforcing cash settlement measures for trading contracts after the SDC became an indirect member of the RTGS-JO and the Central Bank of Jordan (CBJ) was adopted as the settlement bank.

All cash transfers related to settlement of the value of trading contracts executed in the first and second market of the Amman Stock Exchange are effected between the SDC’s Settlement Account at the CBJ and the brokers’ accounts at their commercial banks through the RTGS-JO, on (T+ 2), with same-day value.

The amounts that brokers have to pay are divided to two part: the Liquidity Reserve amount and the Settlement Amount. Subsequent to money transfers being credited to the SDC Settlement Account, the SDC transfers these amounts to the brokers who are net to receive; in addition, the SDC transfers the ownership of the sold securities from the seller’s account maintained by his broker to the buyer’s accounts maintained by his broker on (T+2).

With such major enhancement to the capital market in Jordan, the settlement cycle period was reduced from (T+4) to (T+2). This has reduced the risks associated with cash settlement since previously interbroker payments were made by cheques on (T+1) that did not clear until (T+4).

The SDC'S role as central settlement provider through the CBJ and registrar should provide for a more efficient settlement. The automation of settlement reduces the level of late settlements or delays due to the previous settlement and registration process. This will also result in the execution of corporate actions (such as increase/decrease of capital or merger) in an efficient manner; in addition to the implementation of simultaneous Delivery versus Payment which is considered an important International Standard.