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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008SECURITIES DEPOSITORY CENTER (SDC) OF JORDANAFFILIATE MEMBERSamir JaradatChief Executive OfficerThe Securities Depository Center has madea qualitative leap in the Jordan CapitalMarket by establishing a national center forregistry, depository and clearing andsettlement of securities.The Securities Depository Center (SDC) hasmade a qualitative leap in the Jordan CapitalMarket by establishing a national center forregistry, depository and clearing andsettlement of securities. The SDC is an integralpart of a transparent, viable, fair, and efficientequities market in Jordan that enhance theconfidence of investors in securities andenable them to follow-up their investments withease by establishing a central registry to safekeepthe ownership of securities and reducerisks related to settlement of tradingtransactions executed through the market byimplementing by-laws, instructions andprocedures that are fair, fast and safe.The SDC provides a number of services toinvestors in securities, which include investoridentification and account set-up, statementsof accounts and ownership balances, placingand releasing pledges upon request and thefreezing of deposited securities upon theowner’s request. The SDC has designed andimplemented a state-of-the-art electronicsystem that provides a one-stop solution forregistration, depositing and clearing andsettlement of securities. The Securities CentralOperation Registry Processing & InformationOnline or SCORPIO system is bilingual andprovides a registry that maintains records oflegal ownership of shares.Role of the DepositoryThe Securities Depository Center of Jordan is apublic utility institution established in theHashemite Kingdom of Jordan by virtue of theSecurities Law. The SDC commenced operationin May 1999 and is the only entity in Jordan thatis legally empowered to oversee the registrationof securities, deposit of securities, transfer ofownership, safekeeping of securities andclearing and settlement of securitiestransactions.The SDC is one of the most importantinstitutions in Jordan’s capital market as it holdsthe ownership register of all public shareholdingcompanies where ownership registration is inthe beneficial owner name where nominee &street names does not apply.As a key component in the modernization of thecapital market, the SDC implemented a deliveryversus-payment(DVP) settlement protocol. DVP,a globally recommended settlementmethodology that ensures the simultaneousdelivery of securities against final payment offunds. The ownership is transferred on T+2 andbackdated to T, these transfers are final andirrevocable, and financial settlements arecurrently conducted via the Central Bank ofJordan’s Real Time Gross Settlement System(RTGS-JO) which is a central real time, grossfinal & irrevocable electronic settlement system,using SWIFT instructions to effect transfers withimmediate value.The SDC also developed the “Securities CentralOperation Registry Processing & InformationOnline (SCORPIO)” system. SCORPIO, an SDCdesignedand implemented system, is bilingualand it provides a complete solution for theregistration, deposit and clearing andsettlement.The SDC offers different services to investors insecurities including pledging services, providinginvestors with statements of their securitiesbalances that show the securities owned bythem and their distributions among members; inaddition to providing investors with the ability tofreeze their securities in the central registry.There are no restrictions on the remittance ofinvestment funds into or out of Jordan, allincome & capital gained from investment inJordan are exempted from tax; this includescash & stock dividends. However, (5%) appliesto interest gained from credit balances.Participation CriteriaThe SDC's members are public shareholdingcompanies, public issuers, brokers andcustodians.Eligible PledgeePledgee are not considered members in thatcapacityIssuersMembership is obligatory for publicshareholding companies by virtue of theSecurities Law.Size of Guarantee FundJOD 39.72 mn - US$ 56.42 mn as of 31December, 2007.Does the SDC act as a centralcounter partyNoMemberships in other InternationalOrganizationsThe International Organization of SecuritiesCommissions (IOSCO)Association of National Numbering Agencies(ANNA)Africa & Middle East Depositories Association(AMEDA)Federation of Euro-Stock Exchanges (FEAS)Union of Arab Stock ExchangesCentral Securities Depositories (CSD9)Association of Global CustodianThomas MurrayLegal StatusPublic utility institutionType of Commercial EntityNot for profitRegulated byJordan Securities CommissionForm of SecuritiesDematerialized no physical certificates beingissued in JordanForm of SettlementBook Entry at the SDCSettlement CycleT+2Turnaround Trades TradesAllowed provided the same broker in the samesettlement cycleNumberingISIN CODES complying with the InternationalStandard ISO-6166* Please refer to page 30 for the Jordan country report.CONTACT INFORMATIONContact Name Mr. Samir Jaradat E-mail info@sdc.com.jo Website www.sdc.com.joAddress The Securities Depository Center (SDC) 2nd Floor -Capital Market Building, Al-Mansour Bin Abi Amer StreetAl-Abdali Area, Al-Madina Al-Riyadiya District, Amman, The Hashemite Kingdom of JordanP.O.B. (212465) Amman 11121 JordanPAGE 96
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008TAKASBANK ISE SETTLEMENT AND CUSTODY BANK INC.AFFILIATE MEMBEREmin CatanaPresident & CEOOne of the greatest achievements ofTakasbank in 2007 was the commencementof the acceptance of instructions throughSWIFT integrated Real Time Gross Deliveryversus Payment Takasbank System.Being aware of its role and responsibility for theTurkish and international capital markets, Takasbankcontinues to develop new projects and each yearadds more instruments and mechanisms to create aproductive and reliable settlement and custodyenvironment and thus, to offer international marketplayers an environment that will ensure a stabletechnical and operational infrastructure,In 2007, Takasbank started to accept instructionsthrough SWIFT integrated Real Time Gross Deliveryversus Payment (RTG DvP) Takasbank System. Withthe realization of this project, the DvP settlementprocess is integrated with SWIFT system targeting toprovide T+1 pre-matching between the custodianbanks and brokerage houses giving service toforeign investors.During the course of the year 2008, theimplementation of SWIFT integrated RTG DvPsystem continued with great success. Responding tosystem users' requests, Takasbank will be working tointroduce other transactions to the SWIFT system aswell. With this system, which involves preliminaryelectronic confirmation, Takasbank expects to limitthe number of confirmation-related defaults inforeign institutional investors' transactions and toreduce the operational workload of brokeragehouses as well as settlement banks. The newsystem will also increase automation incommunication between SWIFT users andTakasbank and allow these users to provide servicesthat are more efficient to their customers. Takasbankis also planning to expand the scope of transactionsthat can be performed through the SWIFT system in2008 while introducing new applications for theRTGS delivery-versus payment system, in line withsystem users' requirements. The first field of thisimplementation expansion will be the announcementof corporate action information via SWIFT.In the framework of FEAS efforts, Takasbank sharedits accumulated experience and knowledge aboutthe clearing and settlement issues in Turkish capitalmarkets with its peers in FEAS region. In thiscontext, Takasbank and the Central SecuritiesDepository of the Islamic Republic of Iran (CSDI)signed a Memorandum of Understanding (MoU) inorder to establish a mutually beneficial relationshipbetween the two institutions. This agreement aims toserve the goal of improving performance andinternational competitiveness through mutualexchange of information, know-how and trainingactivities.Within the responsibility of its convenorship of FEASAffiliate Task Force and with the aim of betterunderstanding the needs and goals of affiliatemembers and to provide a more efficient as well asproductive working platform, Takasbank preparedboth a revenue/expense survey and a corporategovernance questionnaire for the ClearingInstitutions, CSDs and CCPs operating in the posttradearena and sent these questionnaires to thepost-trade institutions in the FEAS region. Within thiscontext, Takasbank is also preparing a leaflet whichwould gather the existing internationalrecommendations and best practices related tocorporate governance in securities settlementsystems to be distributed in the 14th GeneralAssembly of FEAS on 10-12 November 2008 at AbuDhabi. I believe that the implementation of thesebest practices about corporate governance wouldenhance the safety and efficiency of globalsettlement process within FEAS capital markets andthus, contribute to increasing volumes of crossborder transactions among FEAS markets.General InformationTakasbank is incorporated as a non-deposit takinginvestment bank and is authorized by the CapitalMarkets Board of Turkey to function as: the Clearingand Settlement Institution for the ISE markets, theClearing House for the Turkish DerivativesExchange, the National Numbering Agency of Turkeyand the Custodian for the Mutual Funds and PensionFunds incorporated in Turkey.Services Provided• Central clearing and settlement for the organizedmarkets of ISE and Turkish Derivatives Exchange(TurkDEX),• Cash settlement and transfer facilities (domesticand cross-border),• Cross-border settlement and custody services,• Real Time Gross DvP settlement (among brokersand custodians) for equities via integration withSWIFT system• Takasbank Money Market,• Securities Lending and Borrowing Market (SLB),• Cash Credits,• Allocation of ISIN for securities issued in TurkeyBrief HistoryTakasbank, started as a department within theIstanbul Stock Exchange (ISE) in 1988, and originallydealt with the provision of settlement services forsecurities traded by the members of the ISE. InJanuary 1992 , the operations of that departmentwere transferred to an independent company, theISE Settlement and Custody Co. Inc., which was setup under the shareholdership of the ISE and itsmembers. This company was then transformed intoa bank and renamed Takasbank (ISE Settlement andCustody Bank, Inc.) in 1996.Form of SecuritiesDematerializedForm of Settlement and Transfers:Book-entryLegal StatusJoint stock companySettlement PeriodEquities: T+2Bonds and Bills: T+0Derivatives:T+1Type of Commercial EntityPrivate sector for-profit companyDoes Takasbank Act as a CentralCounter Party?No for the ISE markets. (However, default procedureis applied for the settlement of the ISE markets).Yes for TurkDEXRegulated byCapital Markets BoardBanking Regulation and Supervision BoardCentral Bank of Turkey.Size of Guarantee Fund(As of August 2008)ISE Equities Market: US$ 40 millionISE Bonds and Bills Market: US$ 48 millionOwnershipIstanbul Stock Exchange (ISE): 32.62%Banks (19): 34.48%Brokerage Houses (67): 32.90%Board of Directors: 11 MembersIstanbul Stock Exchange: 4Banks: 3Brokerage Houses: 2Capital Markets Board: 1and the President and CEO of Takasbank.Memberships to International OrganizationsAssociation of National Numbering Agency (ANNA)International Securities Services Association (ISSA)Society for Worldwide Interbank Telecommunications(SWIFT)Association of European Central SecuritiesDepositories (ECSDA)Future OutlookIn 2008, Takasbank intends to:• Continue its efforts to become a CentralCounterpartyfor equities and establish a central collateralizationsystem• Providing access to the SWIFT system throughTakasbank network for non-SWIFT memberinstitutions ;• Establishment and implementation of a distributionand settlement system for investment fund units onthe integrated system with the CRA• Development and expansion of the scope ofInvestment Fund Custody System;• Contribute to the development of internationalstandards for securities and implementing thesestandards in Turkey.• Give-up process for TurkDEX transactions;• Creation of an electronic securities data base• Unbundling of Takasbank services and initiationof service/product based pricing system* Please refer to page 80 for the Turkey country report.CONTACT INFORMATIONContact Name Ms. Filiz Kaya E-mail international@takasbank.com.tr Website www.takasbank.com.trPAGE 97
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