DvP Model
As per Principle 4 "Credit Risk" of IOSCO recommendations, item 3.4.9 the CDS follows a DvP Model 2 to settle securities on a gross basis and funds on a net basis. Settlement is final and irrevocable once cash and securities have transferred on T+2 according Delivery Versus Payment (DVP).
Clearing of Trades
- The CDS electronically calculates the trading values per each broker intraday on T+0 since the trading system and the CDS system both have a tightly coupled connection (pre verification of inventory).
- Net positions of brokers' financial obligations per each fund are automatically calculated at the CDS system, and showed available on clearing reports at CDS.
- Brokers and settlements banks who are appointed by brokers to settle their obligations have an online access on the CDS to track the net position to be settled at the Real Time Gross Settlement System (RTGS) on T+2. The RTGS is managed by the Palestine Monetary Authority (PMA) and named as BURAQ.
- Based on the clearing reports, a settlement file (called Concurrent Batch) is uploaded on the BURAQ by the CDS, net positions in this file are exactly matching net positions in the clearing reports held at the CDS, as the CDS already is an indirect member in BURAQ at PMA as per the agreement that was signed with PMA for the purpose of processing the cash settlement through the PMA.
Yearbook 2019
Palestine Exchange
Ahmad Aweidah
CEO of Palestine Exchange (PEX)
About Palestine Exchange
Established: 1995
Chairman of the Board of Directors: Mr. Maher Masri
Chief Executive Officer: Mr. Ahmad Aweidah
Address: Trust Co. Build-Amman Street-Nablus
P.O. Box 128, Nablus-Palestine
Contact Name: Mr. Mohammad Khraim
Email: [email protected]
Website: www.pex.ps
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Sanctions for Regulation Violation
The sanctions list of PEX is applied on both the Brokerage firms and the listed companies in case of violation of any of the following Regulations:
• Listing regulations
• Disclosure regulations
• Trading regulations
• Membership regulations
The sanctions' list treats the violation gradually through five levels according to the severity of the sanction, and it varies between warnings, imposing fines (it could be a percentage with a specified Min./Max. limits, or a predefined fixed amount), suspending companies or individuals related to it from implementing certain activities related to PEX, or it could reach the level of canceling licenses for brokerage firms or delisting for listed companies.
Sanctions' list is approved by both the board of directors of PEX and the Palestinian Capital Market Authority since 2006, also it was amended and approved in 2014.
Settlement of Trades
- The cash settlement is processed through the BURAQ at PMA since 01/03/2013, the procedure requires that each Broker (Participant) has to nominate a Settlement Bank and maintain a cash accounts with this bank, he should fund his account at his S. B. before 9.30am on T+2 (Settlement Day), and the S. B. processes cash settlement on behalf of his broker through BURAQ at PMA at no later than 09:30am on T+2, All eight brokers already nominated six S. Bs., who in their turn will settle the obligations of those brokers on T+2 through the PMA in accordance with the settlement file uploaded by the CDS at BURAQ on T+0.
- However in BURAQ, there is an intermediate cash settlement account whose balance should be zero before and after processing the cash settlement, the settlement banks’ cash accounts are to be debited against the intermediate settlement account and credited by this account in accordance with the settlement file uploaded by the CDS.
- On T+2 at 9.30am at the latest, cash settlement occurs between the settlement account and the appointed settlement banks' accounts with the PMA.
- The CDS gets an automatic notification and a detailed report from BURAQ once the settlement is processed on T+2. Taking into consideration that the CDS follows detailed written procedures that manage all settlement related issues between the CDS and PMA, brokers and S. Bs.
- The (CDS) implements a near-simultaneous DVP settlement as the CDS settles securities immediately after receipt of cash settlement confirmation from BURAQ system at 9.30am SD at the latest.
Once cash settlement confirmation is received, a CSD staff clicks a button to trigger the settlement of securities, which automatically update the ownership immediately.
Activities and projects 2019
PEX mirrored the performance of the national economy during the 2019, which grew by 1.20%. Palestine exchange witnessed the impact of the clearing crises with the Israeli side for six months and its effect on fiscal and monetary policy and corporate earnings. Strategic performance and business development PEX continued working on its strategic goals during 2019, which include:
• The overall development of its core systems, in particular the implementation of “X-Stream” trading system of ""Nasdaq"", which is expected to go live in July 2020.
• In-house development of the central securities depository system.
•Modernizing the electronic infrastructure.
• Launch PEX new website during the first half of 2019; featuring a modern interface that allows easily the browser to access the required information.
• Re-opened its representative office in Ramallah, for better networking and outreach exchange’s ecosystem.
• Defined its strategic objectives and road map beyond 2020 and the new digitized environment.
Investor Awareness and Corporate Citizenship
In following up its investor education and sustainability plans, PEX:
• Signed the CEO statement of support for the Women’s Empowerment Principles, produced by the United Nations Entity for Gender Equality, the Empowerment of Women (UN Women) and the United Nations Global compact.
•Joined the World Federation of Exchanges (WFE) and international Organization for securities commission (IOSCO) in the inaugural “Ring the Bell for Financial Literacy” initiative, to draw attention to the importance of financial literacy.
• Collaborated with the UN-Woman to celebrate “International Women’s Day” through “Ring the bell for Gender Equality” initiative to raise awareness on Gender Equality.
• Joined the PCMA, for the third year in arrow, in rolling out the World Investor Week, an IOSCO initiative, with special focus this year on women entrepreneurs in rural areas.
•Hosted hundreds of school and university students in the “visit the exchange” program which include awareness sessions on investment and securities.
• Visited many national universities to raise awareness on the securities sector operations.
•Launched many awareness campaigns using social media including “know your right” to draw attention to shareholder rights during general assembly meetings, “How to Save & Invest” and “The Exchange Terms” which simplify the exchange common terms.
• Played a pivotal role in the financial inclusion efforts in Palestine being an active participant in the steering committee and carrying numerous activities throughout the year.
In 2020 we will continue to focus on the launch of our new core systems including “Xtream” trading engine and our inhouse central securities depository system. This will permit us to enhance PEX product and service offering via introducing new asset classes, increase market depth by targeting new corporations to list at PEX and continue our efforts on investor awareness and market promotion. On the sustainability side PEX will join the Sustainable Stock Exchanges initiative (SSE) of the UN organization.