Muscat Clearing & Depository Company(S.A.O.C)

a

March 08, 2014

19th AMEDA Meeting Muscat, Oman

Agenda

Market Infrastructure

MCD – Historical Overview

Roles & Services

Developments

New MCD System – Overview of changes

Key Statistics

Market Infrastructure

Capital Market Authority

Regulatory Body

Muscat Securities Market

Exchange

Muscat Clearing & Depository Co.

Clearing & Settlement Depository & Registration

Services

Market Intermediaries

Brokers, Custodians, Securities Firms,

Issuers

Other Entities

Insurance & Investment Cos.

3

Muscat Clearing & DepositoryHistorical Overview

The Depository was established by way of a Royal Decree in 1998

Set up as a closed join- stock company

Authorized capital is Rial Omani 2 million

Ownership patterno 60% - Muscat Securities Marketo 40% - Banks, Investment & Brokerage firms

The Board of Directors is constituted by representatives from CMA, MSM, Banks & Investment as well as brokerage companies.

Sole Depository for Sultanate of Oman for all listed companies

4

Roles & Services MCD acts as a Central Securities Depository & also provides

Clearing and Settlement services for all trades executed on MSM

Provides various Depository related services:oIPO management oCorporate ActionsoTrustee Services [for Corporate Bonds]oManages AGMs & EGMsoShareholder Balance TransfersoManages Investor Trust Fund

Manages subscription and redemption of Mutual funds

Facilitates Pledge and Lien on securities

Manages Settlement Guarantee Fund

Acts a National Numbering Agency and issues ISINs

5

MCD Services

MCD

CMA Services

MSM Services

CBO Services

Broker Services

Investor Services

Issuer Services

Custodian Services

Lenders Services

6

Key Developments

Investors

2000 Investor Database precisioning

2004 UnClaimed Fund initiation by MCD

2007 eCard [Muhfazati] launched

2007 KIOSKs service launched

2008 Call Centre set up

2008 WAP & SMS Service introduced

Issuers

2002 Trustee Services for Corp Bonds

2003 Introduction of AGM Services

2004 Corporate Benefits for Govt Bonds

2005 Dividend distribution direct credit

2008 ISIN Numbering as a NNA

2013 Decentralization Invitation printing

7

Key Developments

Central Bank

2003 Govt Bonds holdings with MCD

2005 REPO trades with CBO

2006 CBO acts as Settlement Bank

2006 RTGS link for cash settlement

2011 DepoX Interface for REPOs

2011 DepoX Interface for Govt Bond IPO

Custodians & Brokers

2006 Authorization [blocking] module

2006 Tight coupling with Trading System

2009 Automation of pending trades info

2010 Online tracking of short sells

2010 New Custodian Module implemented

2012 Interest for Bonds – automated info

8

Key Developments

Other - Business & Technical

2011 SGF handling by MCD

2011 Revised C&S regulations

2011 Data centre set up in new building

2011 Participation in e-Govt initiatives

2013 Migration to advanced servers

2013 1st Sukuk listing

2014 New CSD System by Q4

2003 IT department set up

2004 CSD system transitioned from MSM

2004 1st Website of MCD launched

2005 IPO Module implemented

2006 Automated Unclaimed Fund Process

2007 e-Services introduced

2008 Transitioned C&S activities from MSM

9

Investor [Buyer]

Investor [Seller]

Broker [Buyer] Broker [Seller]MSM

MCD

Buy Order

Sell OrderBuy

OrderSell

Order

Trade Data

Authorization

Trade & Settlement data

Trade & Settlement data

Central Bank

Funds Settlement using RTGS

Commercial Bank

Commercial Bank

Funds Settlement data

Funds Settlement data

Funds Transfer

Funds Transfer

Note:Settlement Model : BIS Model 2Settlement Cycle: T+3 for Equities

Fund

s Sett

lemen

t ins

tructi

ons

Fund

s Sett

lemen

t ins

tructi

ons

Trade, C&S process – Overview

10

New MCD system – Overview of changes

State of-the-art systemComponent based Architecture

Multi-tiered [front-end, application, database....]

Latest Technology

Platform independence

Object oriented development

Phase 1 changesNew Investor Account Structure

Enhanced DVP

Advanced Custodial Trade processing

Multiple Settlement Sessions

Automated Close-outs

Technical Overview Functional Overview

11

New MCD system – Overview of changes

ExistingPre-validation with tight coupling with MSM

Single Settlement session per day

Settlement responsibility [only Brokers]

Custodians not part of C&S process managed by MCD

CA – Dependencies & manual handling of fails

NewFlexible Account Structure with Transfer facility

Multiple settlement sessions per day with enhanced DVP

Settlement responsibility [any clearing member]

New process & Custodians to join as Clearing members

Automated Corporate Actions processing

Moving From Moving to

12

New MCD system – Future changes

Phase 2

Securities Lending & Borrowing

Risk Management

Collateral Management

Cash Settlement [Power of Attorney Model]

Direct ACH Participation

SWIFT messaging & Interface

13

e-Services

Shareholder name

My portfolio cards to Investors to access portfolio info thru’ KIOSK machines

Direct system link for custodians

Single PIN to access all the portfolio information thru’ Website and KIOSKs

Direct transfer of dividends and other receivables in the investor bank accounts

SMS service for the follow up of various services provided by the company

WAP service provider for the investor portfolio information

14

Participant Channels

Brokerage Firms /Trusts

Participants Channels MCD

MCD SystemWeb Based Access

WAP

SMS

Individual / Corporate Investors

CustodiansProprietary

Interface

Phase 1 Phase 2

& Banks

KIOSK

15

Key Market Statistics2013 2012 % Change

Number of Shares traded in million 7949.20 4319.19 84Turnover in RO million 2208.22 1025.40 115

Number of Bonds traded in million 213.70 23.00 829Turnover in RO million 46.87 40.43 16

Total Turnover of Trading in RO billion 2.26 1.07 111Daily Average Trading in RO million 9.17 4.28 114Number of Trades ('000s) 457 328.8 39MSM 30 Index 6,834.56 5,760.84 19Market Capitalization in RO billion 14.16 11.67 21Foreign Participation (%) 20 20 -

% C

hang

e

16

Key MCD - Statistics

Key Statistics – Managed by MCD

Details As of Feb, 2014

No. of Investor accounts managed 389,000

No. of Brokers & Custodians 27

No. of instruments under custody 309

Assets under Custody [RO billion] 14.97

Market Value of Pledged shares [RO billion] 1.77

17

CA Cash Benefits – Managed by MCD

Increase in Companies > 622% Increase in Amount > 1579%

Increase in Bank Transfers > 4845% Decrease in Cheque Amount > 15%

More than 1 Billion USD cash distribution handled in 2013 18

Major Milestones

20th May –

1st Day of Trading at MSM

Depository depart-ment

created in MSM

Royal decree to

form MCD as a

closed company

1st Feb – MCD starts

operating as

company

MCD distributes Dividends

for the first time

Investor Number

mandatory + largest

IPO

Clearing & Settlement functions transitioned from

MSM

Name changed to MCD

from MDSRC + New logo

Changing to new MCD

system from Atos

19

Future Plans

Implementing a highly automated state of the art Clearing, Settlement & Depository system

Facilitate Securities lending & borrowing transactions

Introduce advanced Risk management

Introduce e-Voting & e-IPO processes to facilitate market players

Implementation of SWIFT messaging

Adopt the global best practices and align with international standards on a continuous basis

Facilitate easy introduction of new products and services

20

Thank you

For more information please contact: irfan@mcd.gov.om 21