In a significant step aimed at enhancing the role of the Securities Depository Center in developing and reinforcing a secure investment infrastructure in the financial market by managing and mitigating risks associated with fulfilling obligations of trading contract parties, the SDC officially oversees clearing, settlement, and transfer of ownership for all executed trading contracts as per legal provisions.

The Securities Depository Center launched today, Sunday, 04/08/2024, a new system for settling the block trades transactions executed on the Amman Stock Exchange. The SDC has developed and implemented an integrated technical mechanism aimed at executing the clearing and settlement service for block trades, based on a delivery versus payment (DvP) method, adhering to internationally recognized financial market standards.

The SDC has also completed procedures enabling brokers, through its electronic system, to choose to settle any block trade by mutual agreement through the Securities Depository Center. This makes the SDC a guarantor for the completion of the delivery of sold securities by the selling broker against the payment of its value by the buying broker.

When brokers opt for settlement through the SDC, the SDC verifies, before execution, the availability of shares in the selling broker’s account and ensures the buying broker has paid for them in the relevant SDC accounts. Following execution on the trading system, the SDC delivers the securities to the buying broker and transfers the cash equivalent of the sale to the selling broker on the same trading day (T+0).

It is important to note that, prior to the SDC offering this option to brokers and dealers, securities block trades were executed without any intervention from the Depository Center in the financial settlement process. The SDC role was limited to transferring ownership of the securities, leaving the financial arrangements directly between the contract parties. This initiative aligns with international standards in advanced markets and ensures the rights of the involved parties by integrating the SDC in the process of fulfilling obligations, thus activating its role in clearing, settlement, and transfer of ownership as stipulated by law.

it should be noted that involving the SDC as a party in the settlement of transaction contracts is for the current phase optional, based on brokers’ request through the developed system for this purpose. If brokers do not choose this option, the SDC will not act as a guarantor in the settlement process.

Block trades are defined as trading operations conducted in a special session at the Amman Stock Exchange, involving the buying and selling of securities from the seller’s account to the buyer’s account with pre-defined arrangements. The quantity of securities, price, contract parties, and financial intermediaries are predetermined to complete the transaction, which takes place in the special block trades session on the Exchange’s trading system.