Clearing and Settlement

Conducting Clearing and Settlement operations in an efficient and secure manner. Aiming for continuous improvement and innovation in delivering these services to our members.

In the new settlement cycle regime, all types of securities’ transactions are completed two business days following the transaction execution date; i.e. (T+2).

“Edaa” performs Clearing and Settlement of transactions in securities, concluded at the Saudi Stock Exchange.

The clearing is a procedure for calculating the obligations arising from the concluded transactions in securities and the preparation procedure for the settlement of such transactions by checking the availability of the required securities and cash.

The settlement of transactions in securities executed on a delivery versus payment (DvP) basis which means the transfer of securities based on trade transaction is conducted through simultaneous exchange of securities and cash.

Settlement is executed on a gross basis on the securities side and the cash side is netted (DvP Model 2).  This means that the exchange of securities is done between the securities accounts of the participants in the trade transaction (buyer and seller), and the exchange of the funds is done between special accounts intended for settlement of trade transactions of the “Edaa” members at Saudi Arabian Monetary Authority (SAMA).

 

Fails Management

Settlement failure occurs if an Exchange Member was unable to provide sufficient securities needed to settle the rejected trade  before pre-settlement.
“Edaa” facilitates failure resolution solutions but not limited to   SBL, Optional or Mandatory Buy-In, etc.

 

Market Claims

“Edaa” centrally settles market claims resulting from failed trades between Settlement Members.
Market claims are generated in the form of special reports which is sent to corresponding Custody Members.
Market claims can also be settled, subject to the procedures of “Edaa”.

 

Settlement Limits

Settlement limits are pre-determined limits set by Settlement Members in association with SAMA for the exchange member which are notified to “Edaa” and take into consideration current and pending settlement exposure.
The Adjusted Settlement Limit (ASL)  which is a sum of the pre-determined Settlement Limit and the daily trading activities. ASL can change daily or intra-day depending on the trading and proposed settlement activity. Its principal objective is to ensure adequate liquidity to meet executed obligations.

For more information please refer to The Exchange and Center Procedures.

 

BENEFITS:
  • Eliminating principal risk through Delivery vs. Payment (DvP) and settlement through SAMA
  • State of the art infrastructure ensuring high STP ratio in all parts of the process
  • Reduction of liquidity requirements due to efficient netting in the clearing process

For more information, please contact our Customer Service team on email: cc@edaa.com.sa