Settlement Guarantee Fund
The Settlement Guarantee Fund exercises its functions based on the provisions of Article (88) of the Securities Law No. (18) of 2017. The Fund has a legal personality with financial autonomy and is managed by the SDC’s Board of Directors and the chief executive officer. The fund acquires and disposes of movable and immovable property, and performs all legal acts to realize its objectives.
- Covering the cash deficit of a Fund member in connection with his purchases of securities.
- Covering the deficits in the securities account of a Fund member in connection with his sales of securities on the market.
The Fund is managed by the SDC’s Board of Directors and the chief executive officer.
Membership in the Fund is compulsory to SDC members of financial brokers and custodians.
Assets of the SGF are classified according to the collaterals provided by its members as follows:
1- A bank guarantee which is calculated on the basis of the average net amounts due to be paid by the Broker in favor of the settlement as a result of its securities trading transactions through the Market for a period of twelve months with a minimum of (50,000) fifty thousand Dinars in accordance with the following formula:
Amount of the bank guarantee (G)= (A x Px S) ≥ (50,000) Dinars.
A: is the daily average of the net amounts due to be paid by the Broker in favor of the settlement for twelve months;
P: is the percentage of days that the Broker had to pay amounts in favor of the settlement and is calculated by dividing the number of days that the broker had to pay amounts in favor of the settlement by the number of trading days within the period of twelve months.
S: is the settlement period.
2- cash contribution which is calculated in accordance with the following formula:
The amount of the cash contribution = ( X x Y x S) – G ≥ (25,000) Dinars.
X: is the daily average net amounts to be paid by the Broker in favor of the settlement for the last three months.
Y: is the percentage of days that the broker had to pay amounts for settlement for the last three months and is calculated by dividing the number of days in which the broker had to pay amounts in favor of the settlement by the number of trading days in that period.
S: is the period of settlement.
G: represents the amount of the bank guarantee calculated in accordance with the provision of Paragraph (A) of this Article.
1- Bank guarantee with a minimum (100,000) Dinars (for Non-bank custodians)
2- Open Standing Instructions with unlimited value upon agreement with the Central Bank of Jordan (CBJ) to transfer the defaulted amount from their accounts with CBJ to the SDC upon the request of the SDC according to the phrasing accepted by the Fund’s Board of Directors (for Bank Custodians).
The following table outlines the Settlement Guarantee Fund contributions provided by financial brokers as of 31/12/2023:
There are (12) bank custodians that provided the SDC with open standing instructions, whereas non-bank custodians provided bank guarantees to the SDC with the total value of JOD 400,000.