The SDC Participates in the 29th Annual Conference of the (IOSCO)
Date: 20/05/2004
The Securities Depository Center of Jordan (SDC)
participated in the 29th annual conference of the International
Organization of Securities Commissions (IOSCO) held in Amman between
17-20 of May. The SDC also met with a number of Arab and foreign
delegations at the SDC headquarter in the Capital Market Building where
these delegations were briefed on the unique Jordanian experience in
establishing a securities depository in accordance with International
Standards and Best Practices. A number of delegations, including
companies specialized in developing trading, clearing and settlement
software, expressed their interest in the Jordanian efforts in
restructuring the Capital Market and especially in the electronic
systems developed.
The SDC is a public utility institution established in the Kingdom by
virtue of the Securities Law No (23) of 1997. The Securities Law of 1997
separated the functions of the Amman Financial Market (AFM) and created
the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE)
and the Securities Depository Center (SDC).
The SDC commenced operation in May 1999 and is the only entity in Jordan
that is legally empowered to oversee the following responsibilities:
registration of securities, deposit of securities, transfer of ownership
and safekeeping of securities, and clearance and settlement of
securities transactions.
In cooperation with the JSC and the ASE, the SDC has been assigned the
task of bringing about a quantative leap in market efficiency. Since
1999 the SDC has implemented state-of-the-art systems including
automated registry, depository and clearing and settlement systems that
are compliant with international standards and best practices as well as
with G-30 recommendations. Implementation of these systems provides
domestic and foreign investors with the highest possible assurance that
the clearing and settlement of executed securities trades is efficient,
transparent and cost-effective. The globally compliant levels of
operational reliability and safety provided by the SDC systems have
significantly increased public and investor confidence in the Jordanian
capital market and have attracted increased retail and institutional
capital investment from across the globe.
As key component in the modernization of the capital market, the SDC is
implementing a delivery-versus-payment (DVP) settlement protocol. DVP, a
globally recommended settlement methodology, ensures the simultaneous
delivery of securities against final payment of funds. In order to
provide for the orderly and practical implementation of DVP, the SDC has
developed a multi-stage implementation plan. At the first stage of
implementation the SDC established a Central Registry to track
securities transactions at the account level. As a result, the SDC
currently maintains all issuer shareholder books in a unified and
efficient manner.
The SDC also developed “Securities Central Operation Registry Processing
& Information Online (SCORPIO)” system. SCORPIO, an SDC-designed
and implemented system, is bilingual and it provides a complete solution
for the registration, deposit and protection of shareholder assets.
SCORPIO consists of a number of systems and modules for registration,
depository, clearing and settlement and also provides mechanisms for the
risk management and surveillance of clearing and settlement. Its
modules include Brokers, Issuers, Custodian, JSC Surveillance and
Auditing systems, which together enable the SDC to provide investors
with a wide range of services.
SCORPIO complies with international standards and best practice. The
system connects all participants through the wide area network (WAN)
already in place in the Jordan capital market. In the future it will be
possible to link SCORPIO with any trading system because of the system’s
STP (straight through processing) module. SCORPIO can also provide cash
settlement in multiple currencies.
During the first quarter of 2004, the SDC completed another important
stage in the overall implementation of DVP. Operational procedures were
finalized and the testing completed for online communications with the
Central Bank of Jordan’s Real Time Gross Settlement System (RTGS) in
preparation for providing enhanced cash settlement measures for DVP
settlement. The SDC’s linkage to the RTGS will materially decrease the
levels of settlement risk and significantly increase risk management
capabilities for participants in the Jordanian capital market.
As part of its future plans, the SDC will introduce bond processing,
securities lending and borrowing and a new version of the pledge and
lien system. Also, the SDC is designing smart card communications that
will allow individual shareholders, both inside and outside Jordan, to
view their holdings and the transactions carried out by their financial
brokers. In the longer term, the SDC plans to offer market activity
analysis, portfolio valuation and Mark-to-Market services.
The SDC’s transformation from chalkboards and paper stock certificates
to state-of-the-art technological systems is a remarkable one. Since its
inception in 1999, the SDC has seen a five-fold increase in securities
trading volumes and has realistic expectations of continued growth in
the future. The SDC is committed to the principles of continuous
improvement in advancement of its mission to be an integral part of a
transparent, viable, fair, and efficient equities market in Jordan that
will inspire domestic and international investor confidence, and
contribute to the wealth of the nation.
It is worth noting that the SDC also participated in the prestigious
World Economic Forum held at the Dead Sea between 15-17 of May as part
of the Jordan Capital Market Delegation. Attendance at the Forum
enhanced the reputation of the Jordanian Capital Market by raising the
visibility of the Market’s commitment to investor protection and
demonstrating the effectiveness and efficiency of the Market’s
electronic support systems. Participation in the Forum also furthered
the Capital Market’s strategic goal of increasing international indirect
investment in Jordan by attracting global investors.