CLEARING DEPOSITORY & SETTLEMENT (CDS) AMEDA Conference Sun City October 2008

2 2 PALESTINE 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.

3 3 PSE LISTING LISTED SECURITIES CATEGORIZED IN:LISTED SECURITIES CATEGORIZED IN:  5 sectors  37 Listed Co. MARKET INSTRUMENTS:  Only Shares

4 4 TRADING REMOTE TRADINGREMOTE TRADING: –Fully dematerialized environment. –Electronic negotiation and confirmation of trades. –Trading is done through the market intermediaries’ terminals located in their offices

5 5 TRADING CURRENT ELECTRONIC SYSTEMSCURRENT ELECTRONIC SYSTEMS Horizon & Equator Members can trade both for their own account and for their clients

6 6 PSE Core Systems

7 7 CLEARING & SETTLEMENT 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.

8 8 CLEARING & 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.

9 9 CDS REGISTRY REGISTRY STRUCTUREREGISTRY STRUCTURE –Natural Individuals. –legal persons. –Joint accounts. Securities kept in accounts opened are subject to trading.

10 CDS REGISTRY REAL TIME LINK BETWEEN EXCHANGE OPERATIONS REAL TIME LINK BETWEEN EXCHANGE OPERATIONS: – Trading system  Clearing settlement & registry system. – Updating of securities holdings for each individual accounts.

11 CDS Functions 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.

12 Participants Linkage Electronic Services for: Listed Companies. Brokerage firms. Custodian Bank. Settlement Bank Pledgees. Investors.

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

14 Thank you Questions?