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Clearing, Depository and Settlement Dep. (CDS)

 

The Clearing, Depository and Settlement Center (CDS) is an integral department of the Palestine Exchange (PEX), which is registered as a public shareholding company. Being a central depository for the safe keeping and maintaining of securities on behalf of issuing companies, CDS plays a vital role in complementing capital markets institutions. It seeks to deepen and strengthen this role by helping to attract investors and investment institutions from Palestine and abroad.

To consolidate its mission of serving shareholders, investors and stakeholders, CDS provides a reliable, safe, competent and easy to use infrastructure, in line with international standards. This enables it to clear, settle and transfer ownership of securities, thus enhancing the effectiveness of the Exchange. This infrastructure will also render the services provided for investors more compatible with their wishes and expectations. Since the executed transactions in the trading system appear on the CDS system of the PEX immediately, CDS is an integral feature of the PEX trading system.

Objectives and General Tasks:

 

1.     Replacing paper-based environment to e-environment, and managing shareholders’ registries through electronic book entries.

2.     Defining the public shareholding companies on the CDS system as to provide communication between the trading system and the CDS system through which all transactions resulting from the trading transactions appear.

3.     Uploading the shareholders’ registry of the listed companies on the CDS system.

4.     Defining the member brokerage firms on the CDS system to allow members to carry out the tasks entrusted to them.

5.     Calculating the net position due on/to settlement banks who are authorized on behalf of brokerage firms to settle their financial obligations through the RTGS (BURAQ) at the Palestine Monetary Authority (PMA).

6.     Process the cash settlement between settlement banks at BURAQ based on the Concurrent Batch (Settlement File) that is uploaded on BURAQ by the CDS, the BURAQ issues an electronic notification to the CDS one the cash settlement is successfully processed.

7.     Executing the securities settlement on the second working day (T+2) once the cash settlement is finally processed..

8.     Calculating trading transactions fees required from member brokerage firms.

9.     Calculating the cash settlement fees due on brokerage firms.

10.  Issuing Investor Numbers (IN).

11.  Opening trading accounts.

12.  Depositing physical securities certificates.

13.  Moving shareholders’ balances available on CDS system to theirs on the members’ accounts and vice versa.

14.  Executes inheritance and family transfers.

15.  Pledging and unpledging shareholders’ securities based on the pledger’s request.

16.  Restricting board members’ securities during their membership in addition to another six months in accordance with the law.

17.  Issuing securities ownership certificate.

18.  Executing on behalf of the issuers, all corporate actions, including: stock dividends, stock split and other actions that directly affect the shareholders’ registry.

19.  Issuing International Securities Identification Numbers (ISIN) for listed companies according to ISO 6166.

20.  Providing online balance inquiry service for investors to enable them to inquire about their balances in companies listed in PEX through its website.

 

Processing the Cash Settlement through the PMA

Based on the Cash Settlement agreement that was signed with Palestine Monetary Authority (PMA) on 13/02/2013, the CDS started on 03/03/2013 processing the cash settlement between Settlement Banks on behalf of brokerage firms through the RTGS system (BURAQ) at the PMA.

Custodians at PEX:

1.   Cairo Amman Bank, who participated in PEX as a custodian in 2014.

2. Bank of Palestine, who participated in PEX as a custodian in 2015.

3. The National Bank, who participated in PEX as a Custodian in 2015.

4. Bank of Jordan, who participated in PEX as a Custodian in 2015.

 

This allows foreign investors or either locals to sign a custody agreement with a custodian which aims to authorize the Custodian to keep client's securities with the Custodian, and not with the brokerage member firm (intermediary) through which the securities were purchased for this client.