CLEARING DEPOSITORY & SETTLEMENT (CDS)CLEARING DEPOSITORY & SETTLEMENT (CDS)

AMEDA ConferenceSun City

October 2008

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PALESTINE SECURITIES EXCHANGEPALESTINE SECURITIES EXCHANGE

Since PSE’s first trading in 1997, market operations have been conducted within a dematerialized environment, through fully electronic systems, in accordance with the international standards.

• Services delivered by PSE:Traditional services: trading, listing, data

dissemination.Clearing and settlement through a special

department (CDS).Registry services.

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PSE LISTINGPSE LISTING

• LISTED SECURITIES CATEGORIZED IN:LISTED SECURITIES CATEGORIZED IN:

5 sectors

37 Listed Co.

• MARKET INSTRUMENTS:MARKET INSTRUMENTS:

Only Shares

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TRADINGTRADING

• REMOTE TRADINGREMOTE TRADING: – Fully dematerialized environment. – Electronic negotiation and confirmation of trades.– Trading is done through the market

intermediaries’ terminals located in their offices

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TRADINGTRADING

• CURRENT ELECTRONIC SYSTEMSCURRENT ELECTRONIC SYSTEMS

Horizon & Equator

Members can trade both for their own account

and for their clients

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PSE Core SystemsPSE Core Systems

CDS System “Equator”

OS: AS400

Provider: OMX

Location: PSE

Trading System “Horizon”

Provider: OMX

Location: PSEOS:

AI X Unix

Tightly Coupled

CDS DB & App.

Trading App.

TWS

E- Trading

Client Access

SA

Data Dissemination

Web Site

Data Dissemination Programs

Account & I nventory validation

Trading & Monitoring

Confi gure trading settings & rules

I nternet invests with already opened account

I nternet Clients

Provider: OMX

Provider: OMX

CMAPSE Brokers

PSE

PSE

Brokers

Provider: I BM

CDS Services

Listed company

HSBC

Brokers X

CMA

LAN

Internet

Leased line

VPN

PSE Core Systems

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CLEARING & SETTLEMENTCLEARING & SETTLEMENT

MAIN CHARACTERISTICS:MAIN CHARACTERISTICS:

– Rolling settlement cycle: T+3; Settlement is final and irrevocable.

– Delivery Versus Payment (DVP).

– BIS model 2: Gross Settlements of Securities Transfers Followed by Net Settlement of Funds Transfers.

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CLEARING & SETTLEMENTCLEARING & SETTLEMENT

• Participants in the settlement processParticipants in the settlement process: – Settlement bank.– Brokerage firms.– Custodians.

• 100% Settled transactions100% Settled transactions– No failure of the settlement.

• COST EFFECTIVE:COST EFFECTIVE:– No specific fees for clearing and settlement.

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CDS REGISTRYCDS REGISTRY

• REGISTRY STRUCTUREREGISTRY STRUCTURE

– Natural Individuals.– legal persons. – Joint accounts.

Securities kept in accounts opened are subject to trading.

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CDS REGISTRYCDS REGISTRY

• REAL TIME LINK BETWEEN EXCHANGE REAL TIME LINK BETWEEN EXCHANGE OPERATIONSOPERATIONS:

– Trading system Clearing settlement & registry system.

– Updating of securities holdings for each individual accounts.

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CDCDSS FFunctionsunctions

• Register: Sharebook register to maintain the details of the Beneficial Owners of Securities.

• Depository for recording.• Clearing and Settlement (Funds and Securities).• Trading Accounts.• Stock Transfers & Movements. • Pledging.• Corporate Actions. • Off floor movements:

– Inheritance.– Transfers within families.– Endowment movements.– Joint movements.

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Participants LinkageParticipants Linkage

• Electronic Services for:• Listed Companies.• Brokerage firms.• Custodian Bank.• Settlement Bank• Pledgees.• Investors.

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CDS PlansCDS Plans

• In-house Cash Settlement & Guarantee Fund.• Cash Dividend Process.• EIPO.• Automation of available end user services.

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Thank youThank you

QuestionsQuestions??