Palestine Exchange Rules
Membership Regulation
Palestine Securities Exchange Board of Directors
approved this Regulation in its Fourth Session on
3/8/2006
Palestinian Capital Market Authority Board of
Directors approved this Regulation in its Twentieth
Session on 18/12/2006 (Decision 2/20)
January 2007
Chapter One
Definitions
Article (1):
The following words, wherever appears in the text of this rule, shall mean the
following unless otherwise indicated:
"Law": The Securities Exchange Law No (12) of 2004 as amended and includes the
instructions and regulations issued pursuant thereto.
"Authority": Means Palestinian National Authority.
"PCMA": Means Palestinian Capital Market Authority.
"PSE": Means Palestine Securities Exchange, including the Clearing, Depository, and
Settlement Center, which is a secondary market where listed securities are traded. This
PSE will be two classes: first and second.
"Board of Directors": PSE Board of Directors
"CEO": PSE manager/chief executive officer.
"Securities": Means shares and bonds issued by the Authority or governmental
institutions or municipalities or public shareholding companies or any other securities
that may be traded pursuant to the Law.
"Holding Company": The Company that exercises financial and management control
over another company or several subsidiaries by owning more than half of its capital
and/or control the composition of its board of directors or own over 50% of its shares.
"Subsidiary company": The Company that is controlled by another company (the
parent) who owns not less than half of its capital whereby it controls the composition
of board of directors.
"Related Company": The Company that dominates another company or is dominated
by another company or where another company dominates both companies by a
percentage between 20%-50% without issuing consolidated financial statements.
"Issuer": The legal person that issues securities or announces its intent to issue
securities.
"Control": means direct or indirect ability to affect the acts and decisions of another
person and control is deemed actual when a person owns more than 50% of the shares
of the company
"Owner": means any person that owns more than 5% of a membership company’s
capital.
"Major Owner": any person who owns directly or indirectly 10% or more of the
securities of the issuer.
"Public": means persons who are affected directly or indirectly, by the financial and
investment activities in the PSE.
"PSE Rules": Palestine Securities Exchange approved regulations by PCMA, and the
instructions, resolution, directives issued by the PSE pursuant to these Rules.
"Related Party": any employee, who engages a management senior position in a
company or enjoys signature power on behalf of such company, or an insider who has
access to material information that affects the price of the securities of such a
company or the auditor of such a company or any of its founders or members of the
board of directors, or a person who holds, directly or indirectly, 10% or more of the
capital of such a company. A related person also includes the indirect property for this
purpose that held by a relative up to the second degree or the property of a company
owned by him or his first degree relevant, over 50% of the company capital shares.
"Trading Unit": means (1) security.
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"Organizing Committee": means the committee appointed by the board of directors
to review membership company's activities and conducts at the PSE.
"Membership Committee": means the committee appointed by the CEO to review
membership applications.
"Membership Company": The securities Company licensed by the PCMA, and
member to both PSE and the Center.
"Operating Membership Company": means the company licensed by the PCMA
and duly registered at the PSE as a member, and who has met the requirements
stipulated in Article (6) of this rule and who has maintained continued business
activities without any partial or complete interruption.
"Authorized Person": the employees of the membership company who was
authorized by the PSE as a financial advisor for invest in securities.
"Accredited Broker": any employee of the membership company who is authorized
by the PSE to trade in securities for the account of the membership company and to
enter sell and buy orders through the electronic trading system.
"Broker": means any employee of the membership company to serve the customers
and to receive their sell and buy orders.
"Management": means all the staff at the membership company in management
positions especially those persons who serve as general manager, deputy general
manager, financial manager, and any person in charge of supervision over three or
more persons.
"Staff of the Membership Company": means all the staff of the membership
company including the management, the licensed person, the financial advisors, and
accredited broker.
"Services": means the additional services provided by the company to its customers
subject to the approval of the PSE without need for licensure.
"Letter of Guarantee": The letter of guarantee issued by a bank in favor of the PSE
to guarantee the liability of the company applying for membership in the PSE with a
specified amount to be liquidated upon the failure of meeting its obligations. The
letter authorizes the PSE to demand payment and the bank commits to pay
unconditionally.
"Sell and Buy Order" or "The Order": means the order entered by the membership
company to sell or buy listed securities in the PSE through the electronic trading
system either for its own account or for the account of its clients received from any of
its clients either in writing or through the telephone or any other means approved
pursuant to Trading Rule.
Chapter Two
Membership Conditions at the PSE
First: Preliminary Membership Approval Conditions.
Article (2)
1. PSE shall review the applications of companies requesting licensing from the
PCMA; the conditions to receive preliminary approval for membership will
consist of:
a. The company must have applied for a license to the PCMA and the PCMA
transfers the application to the PSE.
b. The company applying for membership must be established and registered
in Palestine. A securities company that is a member of a foreign exchange
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may apply for membership at the PSE if it has a branch or subsidiary
company or holding company or related company in Palestine.
c. The articles of incorporation and by-laws of the company shall specify the
objectives which must restricted to dealing in securities through
intermediation or other actions specified in the Law, and they shall not be
permitted to conduct other commercial activity including banking
operations and currency trading, unless additional licensing was obtained
from concerned parties, on condition, that these activities be fully separated
from the primary function related to securities to be qualified as PSE
membership.
d. The paid-in capital of the company may not be less than Two Millions
(2,000,000) US Dollars or its equivalent in legally tendered currencies
provided that One Million (1,000,000) US Dollars or its equivalent in
legally tendered currencies is cash money or liquid assets and this, for
companies that wish to sell and buy securities listed in the PSE whether for
the account of customers or its own account. In the event that the company
wants to exercise other activities like underwriting and sale of new issues of
securities and management of investment funds its capital may not be less
than Four Millions (4,000,000) US Dollars or its equivalent in legally
circulating currencies provided that Two Million (2,000,000) US Dollars or
its equivalent in legally circulating currencies shall be either in cash or
liquid assets.
e. That no member of the company's board or any of its directors, whichever
the case maybe, shall have stopped paying his commercial loans, even if
unrelated to insolvency, or declared bankrupt but not discharged or have
been found guilty of a crime related to honor and trust and not discharged.
f. That the percentage of board members who have an understanding of the
securities sector is not less than 30% from the number of the board of
directors of the membership company.
g. That no board member or a staff member of the executive management
shall be a member of the board of directors of another membership
company or works for the PCMA or the PSE.
h. The company undertakes to abide by the provisions of the Law and the PSE
Rules, and commits to obtain the approval of the PSE in matter and
decisions that require such approval in accordance with the PSE Rules.
i. The company undertakes and commits to accept the right of the PSE to
impose penalties and sanctions that the Rules and PSE internal instructions,
including fines and seizure of property and company assets, and stop the
company or any of its employees to work whether partially or fully in
accordance with the Law.
j. The company commits not to hire any person in a responsible management
position or a financial advisor or any professional person who deals in
securities unless licensed by the PCMA and registered at the PSE.
k. Specify the headquarters of the company.
l. The company commits to state on its correspondence and publications that
it is a member of the PSE.
2. The conditions enumerated above shall constitute the minimum for
membership.
3. The PSE may, at any time, change the minimum conditions to obtain
membership after the approval of the PCMA, in specific the PSE may require
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the membership company to increase its capital, especially if it practices other
activities such as underwriting and sale of securities issues and management of
investment funds.
4. Any sudden change to the Membership Conditions, which are referred in the
previous paragraph, shall apply in relation to the membership company from
the date of sending a written notification to the company. The membership
company shall make the required adjustments within the time limit set by the
PSE, provided it informs the PCMA, otherwise, it shall face sanctions.
Second: Conditions and Requirements for the after Preliminary Membership
Approval.
Article (3)
1. To obtain the final approval for PSE membership, the company, during a
period not exceeding 3 months from the date of the preliminary approval,
shall:
a. Obtain a license from PCMA.
b. Open a settlement account at a settlement bank.
c. If the company wants to sell and buy securities listed at the PSE for the
account of customers or its own account only, it shall contribute to any
funds or joint insurance established by the PSE and shall provide a cover
according to article (85) of Trading Rule. In the event the company wants
to perform other functions like underwriting or sale of new issue, and
management of investment funds, it shall provide a cover of no less than
Three Million (3,000,000) US Dollars or its equivalent.
d. If the company want to sell and buy securities listed at the PSE for the
account of customers or its own account only, it shall pay memberships and
make deposits in the settlement guarantee funds, if established, to cover the
settlement operations, or provide a letter of guarantee in the amount of
Three Hundred Thousand (300,000) Jordanian Dinars or its equivalent in
US Dollars issued by a bank operating in Palestine valid for one year,
renewable automatically, and it shall cover the liability of the membership
company towards the PSE or the member companies or customers. If the
company wanted to perform other functions like underwriting or sale of
new issue or management of investment funds, it shall provide a letter of
guarantee in the amount of Six Hundred Thousand (600,000) Jordanian
Dinars or its equivalent in US Dollars.
e. The company shall provide headquarters to perform its activities in
accordance with the requirements of the PSE, and shall provide the
equipment required for its business in accordance with the specification set
by the PSE as stipulated in the Members Operations Manual issued by the
PSE.
f. No company shall be accepted into membership until it appoints the
following, at least:
1. Full time general manager who has earned a university degree and
shall have worked in financial or banking institutions for a period not
less than 7 years.
2. Full time deputy general manager who has earned a university degree
and shall have worked in financial or banking institutions for a period
not less than 3 years
3. At least one accredited broker approved by the PSE.
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4. Financial manager approved by the PSE within the following
specification:
 Minimum good bachelor's degree in the fields of accounting,
financial and banking science from a recognized and well known
university.
 5 years experience in financial analysis, financial auditing and
accounting.
 Preferred to have the following experiences:
1. Professional certificate like CMA, CIA, CPA, ACPA.
2. Worked in stock markets, CDSs, banking institutions,
brokerage firms or any other related institutions.
 Other operational requirements like high skills in using Microsoft
office, good knowledge in laws and legislations in Palestine, ability
to make financial planning, prepare budgets for all programs and
activities, follow-up all administrative issues (purchase, contracts,
salaries, employees affairs, prices offers and all other
administrative issues) and preparing balance sheet and prepare
periodical reports.
2. In addition to the previous paragraph, the membership company shall provide
the following undertakings in order to obtain the final approval to operate as a
member of the PSE:
a. Pay all amounts due and owing by it such as membership and trading fees,
and it commits to cover all expenses associated with connecting it to the
PSE network and its trading and ownership transfer systems in accordance
with the PSE rules.
b. Pay all contributions and membership dues in the settlement guarantee
funds as well as the rights of investors and other funds and accounts
specified in the Law and the PSE rules.
c. Implement training, upgrade and development programs approved by the
PSE and shall commit to maintain sufficient levels of service to the public
and implement instructions issued by the PSE in this regard from time to
time.
d. Perform certain activities determined by the PSE from time to time such as
market making and other investment activities pursuant to orders and
instructions issued by the PSE in this regard.
e. Equip the headquarters of the company, provided that the required
technology necessary is available to ensure that the company is able to
perform trading operations through the PSE systems in a safe and
appropriate manner and without interruption.
f. Disclose information in accordance with the Disclosure Rules, and make its
books and records available for auditing and provide the documents and
other information requested by the PCMA and the PSE.
g. The company commits, along with all it staff, not to disclose to any person
any information related to the transactions of investors or securities owned
by them without their written consent for each time disclosure of
information is requested with the exception of information that must be
otherwise disclosed in accordance with the Law or the Disclosure Rules.
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Article (4)
Documents submitted by the company for membership at the PSE shall not be
returned in accordance to this Rule, even if its application were denied.
Article (5)
The membership company, in order to maintain its membership at the PSE, shall:
1. Meet the capital requirements and provide the two letters of guarantee specified in
this Regulation.
2. Appoint a board of directors or a committee of officers qualified as specified in
this Rule. .
3. Commit to maintain a high level of performance and services to investors.
4. Pay all amounts due to the PSE in a timely manner and without delay.
5. Abide by the Law and the Rules of the PSE and implement them strictly.
6. Have a valid license from PCMA.
Article (6)
1. Membership companies of the PSE shall abide by the following:
a. Trade in the securities listed in the PSE, either for its own account or the
account of others.
b. Use the trading and deposit and settlement systems provided by the PSE
and their related services in accordance with these Rules and other PSE
rules.
c. Participate in training programs determined by the PSE.
2. The operating membership company, may not, in any manner, delegate to a third
party the conduct of any of its business.
3. Membership companies, whether operating or non-operating, may obtain a
license from the PCMA to perform underwriting and management and
distribution of new securities and manage investment funds and offer investment
advice or perform any other activity stipulated in the Law or approved by the
PCMA.
Membership Application
Article (7)
PSE shall provide a special application form for membership containing the following
information:
1. A general description about the company applying for membership.
2. Indicate whether the company applying for membership is a Palestinian or
foreign company and state its domicile, if the latter.
3. Address of the headquarters of the company applying for membership and its
branches.
4. Names, addresses and qualifications of the membership company board of
directors or the committee officers of the company applying for membership.
5. Names of persons authorized to sign on behalf of the company applying for
membership at the PSE and a specimen of their signature.
6. Financial activities, duly licensed by the PCMA, which the applicant intends
to perform.
7. Authorized, subscribed and paid-in capital of the company applying for
membership.
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8. Audited financial statements of the company applying for membership for the
past two years prepared in accordance with international accounting standards.
If the company has been established for less than two years, for the length of
period since or at least a feasibility study for the next two years if the company
were newly established.
9. List of shareholders names or major partners and the percentage of share
ownership of each in the company applying for membership at the PSE or
listed in the PSE, if the company was a holding or subsidiary or related
company, it must present a consolidated organization chart for these
companies and a statement indicating the relationships between them and the
structure of the shareholders and the members of their boards.
10. List of litigation involving the company applying for membership or any of its
staff or shareholders is a party, whether plaintiff or defendant.
11. A declaration about the accuracy of the information presented in the
application signed by authorized person(s) and sealed.
Article (8)
1. The company interested in membership shall apply by filling membership
from approved by the PSE.
2. It must enclose the following with the application:
a. A copy of the certificate of incorporation of the company applying for
membership, and if it was a foreign entity, it shall provide proof of its
membership at the stock exchange where it is domiciled, and shall provide
proof that it has a branch in Palestine or is a subsidiary or holding or related
company to the foreign entity.
b. A copy of the articles of incorporation and the by-laws of the company
applying for membership.
c. Audited financial statements of the company applying for membership for
the past two years prepared in accordance with international accounting
standards. If the company has been established for less than two years, for
the length of period since or at least a feasibility study for the next two
years if the company were newly established.
d. A certificate shows that the capital shares of the company is fully paid in.
e. A list of the employees of the company applying for membership and their
profiles showing qualifications, experience and position in the company.
f. A list of the names of the persons authorized to sign on behalf of the
company applying for membership and their specimen and a copy of the
resolution granted this authority.
g. A statement by each member of the board of directors or its committee of
officers, whichever the case maybe, that they never stopped paying their
commercial loans even if no insolvency or bankruptcy was declared
without being having been discharged, and that the member had no prior
convictions for crimes related to breach of trust or honor without having
been discharged.
h. An undertaking to notify the PCMA and the PSE of any changes to the
information supplied in the membership application.
i. The documents that demonstrate the accuracy of the information provided
in the membership application form stamped by the company's seal and/or a
declaration of its accuracy.
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3.
4.
5.
6.
j. The architectural plans for the offices of the company and each of its
branches.
k. Names of persons who own 10% or more of the company's capital.
l. Issuers, where the company or its board members, or committee officers or
its manager or agents who own more than 5% of its issued securities.
m. All licenses issued by the PCMA to the company.
n. An undertaking to abide by the Law, regulations, and instructions, orders,
and PSE Rules.
o. A declaration that the company agreed that PSE could provide its
information to any related official entity.
p. The plan of the company related to employing nationals for the purpose of
hiring nationals in the event that its employees where foreign.
q. Other documents that PSE deems necessary.
The application for membership is submitted to the membership committee at
the PSE, who shall provide a receipt for the showing the date and the record
number in the membership application registry.
The membership committee reviews the application and makes sure that it has
met the conditions and is supported by the required documents, and informs
the applicant if there are missing documents within a week from the date of
application, and the company shall supplying any required documents within
two weeks from the notice at most.
The membership committee shall give a recommendation to the CEO of the
PSE within 21 days from the receipt of the full application. If the membership
committee's decision is denial, the reasons must be provided and the company
applying for membership will be informed, who shall have the right to object
in accordance with the Dispute-Settlement Rule.
The CEO submits the application, supported by its opinion about the
recommendation of the membership committee, to the board of directors, who,
in turn, shall review the application and make its decision within 30 days from
receipt. The board of directors, to make the decision, may assess the financial
position of the company applying for membership and the qualifications of its
board members or committee of officers and the company interest in
advancing the operation of the PSE. The board of directors, may, for the same
purpose, request from the company applying for membership additional
information or documents.
Article (9)
1. The person wishing to work as an accredited broker at the PSE shall apply to
the PSE for approval and shall use the designated form.
2. The PSE shall review the application and verify that it has met the following
required conditions:
a. Must be a holder of a bachelor's degree in fields of study related to stock
markets, financial and management science, law, accounting or similar
fields.
b. Shall have at least a two-year working experience in the filed of securities
recognized by the PSE.
c. Must have legal capacity.
d. Must be well reputed and have a good record and/or have no prior
convictions for an offense or misdemeanor for breach of honor or breach of
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3.
4.
5.
6.
trust unless discharged, and was not dismissed or suspended from dealing
in securities.
e. Must have participated in the accredited broker training required by the
PSE.
f. Must have passed the accredited broker exam approved by the PSE, both
the theory and practical exams.
In the event that the applicant meets the requirements specified in paragraph
(2), a certificate will be awarded (accredited broker) by the PSE and the
person may apply to securities companies approved by the PSE to work as an
accredited broker.
In the event that the accredited broker disrupts his work in securities for two
consecutive years, the PSE has the right to require applicant to retake the test
of accredited broker.
After 5 years from having obtained the authorized dealer certificate, the PSE
has the right to require the accredited broker to take additional training as it
deems appropriate, on the average of one training program every two years, at
least.
The CEO may suspend any accredited broker from working or revoke the
license if the person fails to abide by the Law and the PSE Rules and/or in the
event if it fails to meet one of the conditions that must be met by the
accredited broker as stipulated in Article (9/2) above.
Article (10)
If the membership application was denied, the company, may:
1. Challenge the decision in accordance with the Dispute-Settlement Rule.
2. Shall be prohibited from applying again until 6 months, at least, have passed
on the issuance of the denial decision, unless the Violations Committee
determines otherwise.
Article (11)
1. If the board of directors approves the membership application, the PSE shall
inform the company within 3 days from the date it was made, specifying the
services that the company can perform.
2. The PSE shall verify the conditions and requirements for the after primarily
approval on Membership as stipulated in paragraph (3) of this Rule.
3. The PSE shall register the company in the record of member companies, set
for this purpose, and each securities company shall be assigned a serial
number, and its sheet shall have its data and documents supplied when
applying for membership.
4. Membership agreement to be signed between the Membership Company and
PSE.
5. PSE will inform the PCMA of the registration of a membership company in
the register within a week.
6. The PSE may, after the approval of the PCMA, revoke the membership of any
company if it appears that it supplied misleading or inaccurate information in
the membership application.
Article (12)
The PSE shall establish a special register for investment advisors, custodians and any
other person licensed by the PCMA who are approved members by the PSE.
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Chapter Three
Relationship of the Membership Company with the PSE
Article (13)
1. The membership company shall be allowed to trade securities through the PSE
and to use its facilities and systems subject to the PSE rules.
2. The membership company shall start operations within 6 months from the date
of registration in the member's registry, otherwise, the PSE's board of directors
may terminate its membership.
Article (14)
1. The membership company may present any comments or suggestions to the
PSE in order to develop and modernize the membership rules.
2. The membership company may lodge a complaint against another membership
company or listed company to the PSE and may lodge a complaint against the
PSE to the PCMA pursuant to the Law.
3. The membership company may not provide additional services or stop any of
these services before informing the PSE.
Article (15)
The membership company must equip its headquarters with the required equipments
to launch its activities and implement training and development programs required by
the PSE.
Article (16)
The membership company commits to adopt written internal operations procedures to
monitor all its operations whereby these procedures shall be consistent with the
prevailing laws, including the following:
1. The staff of the membership company conducts themselves in accordance with
their respective authorities.
2. The deals made for the account of the membership company's staff and their
relatives of the first degree are executed with the knowledge of the
membership company.
Article (17)
1. The membership company shall provide PSE with all information, documents,
records, and reports requested within the specified time and period specified in
this Rule and the membership application.
2. The PSE may verify the information presented to it by the membership
company in any manner it deems appropriate.
Article (18)
1. The membership company shall, when the decision to accept its membership
is issued, and for the duration of its membership, pay these fees and dues:
a. One time membership fee.
b. Annual membership fee.
c. Membership suspension fee.
d. Trading fees and commissions.
e. CDS fees and commissions.
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f. Fines imposed on the membership company in accordance with the PSE
rules.
g. Contributions for any compensation funds or joint insurance funds
established by the PSE, and the letter of guarantee for clearing of daily
traded deals at the PSE, whether the letter of guarantee was in favor of the
settlement bank or the amount was deposited in cash in the settlement bank
in accordance with Article (3) of this Rule.
h. Contributions and deposit funds made for a settlement funds, or the
guarantee letter in favor of the PSE issued by a bank operating in Palestine
and valid for one year renewed automatically, covering the liability of the
membership company towards the PSE or member companies or customers
in accordance with Article (3) of this Rule.
i. Any other fees imposed by the PSE in accordance with the Law and the
PSE Rules.
2. The value of these fees and dues and contributions and letters of guarantee and
their payment dates, from time to time, shall be set by the PSE rules.
3. The membership company shall renew the two letters of guarantee specified in
this Article annually.
Article (19)
1. The PSE may, from a time subsequent to the membership of the company,
request that it presents an additional letter of guarantee during a period not
exceeding 3 months if the business of the company required it.
2. The membership company shall pay a fine to the PSE in the amount of three
hundred (300) Jordanian Dinars for every day of delay in presenting the letter
of guarantee, without derogating from the PSE power to impose the sanctions
determined by the organizing Committee issued pursuant to the Dispute
Settlement Rules.
Article (20)
1. Membership companies undertake, along with their staff, managers, members
of the board of directors, proxies, shareholders, and any other parties related to
its business and activities in the PSE, to refrain from bringing any legal action
or institute proceedings against the PSE or against any member of PSE board
of directors or management or committees or staff while in the conduct of PSE
business or while implementing the rules of the PSE.
2. The membership company commits to compensate the PSE for any loss
sustained by the PSE or its staff or board members for negligence or
misconduct of the membership company.
Article (21)
The membership company may not apply for membership in any other securities
exchange unless it obtains the prior approval of the PSE.
Article (22)
1. The membership company shall notify the PSE of any change that occurs to its
membership application data, and any other matter which has a material effect
on the membership company's performance of its activities, and its standing as
a membership company operating at the PSE.
2. The membership company shall notify the PSE of:
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a. Any merger or acquisition or major change that occurs to its ownership.
b. Any amendment to its articles of incorporation or by-laws.
c. Membership in any other foreign securities exchange as specified in the
previous article.
d. Any violation of the taxation laws that result in penal action.
e. Any penalties imposed on the membership company or its staff or board
members or managers or partners or proxies.
f. Any legal suits or proceedings taken against the membership company or
any of its staff in relation to the PSE activities.
g. Not reporting any violation of the PSE rules when known, regardless of
whether the violation was proven or not.
h. The declaration of bankruptcy of the membership company or its default or
inability to settle its commercial loans owed to third parties, including
returned checks or halt of its banks accounts or refusal of a bank to open a
bank account for a membership company.
i. Termination of employment of any of the membership company's staff.
j. Suspension of the membership company's activities.
k. Any change that occurs to the membership company's address or names and
addresses of its staff licensed by the PCMA.
3. The notifications mentioned in the two previous paragraphs shall be made
within 10 days of occurrence or the change or its implementation. If the period
is breached, the membership company shall pay a fine in the amount of two
hundred (200) Jordanian Dinars for each day of delay without derogating from
the PSE imposing the sanctions in accordance with the Dispute-Settlement
Rule.
Article (23)
The CEO decides within two (2) working days from receipt of the notice provided in
the previous article the following:
1. If the membership company may continue operating when the matter is under
review; or
2. Decide to impose conditions on the membership company during the review
of the matter including increase the capital invested in the membership
company or the necessity of having party oversee its operation which the PSE
approves.
Article (24)
1. The CEO shall submit a recommendation concerning the membership
company to the organizing committee as soon as the decision is made.
2. The organizing committee shall, within 10 days from receipt of the
notification of the CEO, mentioned in the previous Article (22), to notify the
membership company of its intent to continue the investigation and whether
any of the provisions of Article (23) apply, or both.
Article (25)
The PSE may hold membership companies accountable for every bit of information
that is inaccurate or misleading mentioned by the membership company in research
and analysis concerning the PSE which is made public.
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Article (26)
1. The membership company shall adopt an internal control system to ensure the
accuracy of all activities carried out by its staff.
2. A procedures manual for internal control shall be prepared and shall specify
the persons responsible and their positions and their qualifications.
3. The membership company shall ensure the qualification of its staff as to the
years of experience and training received.
Article (27)
1. The PSE may inspect the member companies to ensure that they are in
compliance with the Law, regulations, instructions, order and PSE Rules.
2. The PSE shall inspect the membership companies either by prior notice or
without, provided that the inspection is made during business hours and to
inform PCMA with the results of the inspection.
3. The CEO or the authorized staff of the PSE in order to perform surveillance
and inspection function, may carry out the following:
a. Have sight of all records, documents, data, papers, correspondence,
contracts and decisions, including bank statements and accounts related to
the membership company and obtain copies or keep the original giving a
signed receipt.
b. Request any information or documents or data deemed appropriate for
purposes of inspection and supervising.
4. The membership company and its staff shall facilitate the duty of the PSE staff
authorized to conduct the supervision and inspection and provide requested
information.
5. Information viewed by the management of the PSE, its staff and advisors shall
be deemed confidential and may not be disclosed unless with the consent of
the board.
Article (28)
1. In event that PSE finds that the membership company is facing financial or
management difficulties and its continued business operation may risk the
interests of investors or other member companies or the PSE, the PSE may
either suspend the activities of the membership company or place restrictions
on the additional service provide by the PSE to the membership company that
PCMA is informed.
2. The PSE may, in cases where it institutes the steps described in the paragraph
above, hold a hearing session for the membership company to present any
objections against the PSE decision, which will not detract from its right to
complain in accordance with the Dispute-Settlement Rule.
General Obligations of the Membership Company
Article (29)
1. The membership company shall be prohibited from investing in any company
that conduct activities not related to securities business.
2. Notwithstanding the previous paragraph, the membership company may own
securities listed in the PSE for the purpose of trading and money employment
and market making or any other purposes specified in the Law.
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Article (30)
1. The membership company may not deal in listed or unlisted securities for its
own account or the account of any customer unless duly licensed by the
PCMA and has the approval of the PSE to deal in securities.
2. The PSE may adopt a trading unit identified as a category for the purpose of
listing and trading of securities and each unit may have special condition
attached thereto:
a. Shares listed at PSE.
b. Bonds listed at PSE.
c. Investment certificates issued by investment funds.
d. Spot contracts, futures, call options and put options contracts relating to
securities listed at the PSE, or indices of other exchanges approved by PSE.
e. Securities not listed at PSE.
3. Listing Rule shall specify the required conditions to deal with each of them.
For unlisted securities, and which membership companies trade, the PSE shall
have a special register to register these trades and their prices. The PSE may
not publish the information recorded in the register except for statistical
purposes and in accordance with instructions issued for this purpose.
4. For the purpose of trading securities as specified by the PSE, the membership
company shall identify one or more person to be responsible for trading in
these categories.
5. The PSE shall set the requirements and qualifications that the person
mentioned above must have.
Membership Termination and Suspension
Article (31)
The membership company who wishes to terminate its membership at the PSE shall
present a written letter in this respect 3 months prior to the date of termination
providing the reasons for such a request and the date of effectiveness supported by the
following:
1. The audited financial statement for the membership company up to the date of
submitting the request stating the membership company’s short term assets are
sufficient to cover its obligations towards the customers and the PSE.
2. A statement issued by a certified accountant approved by the PSE verifying
the accuracy of the information provided under the previous paragraph.
3. Other documents and information requested by the PSE.
Article (32)
The PSE may request any financial information or other information that the PSE
deems necessary and shall provide any guidance that it deems appropriate for the
purpose of terminating the business of the membership company in an orderly
manner.
Article (33)
The CEO shall confirm the following, before submit a recommendation to the
organizing committee concerning the termination of membership at the PSE:
1. That short term assets of the membership company are sufficient to cover its
obligations towards its customers.
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2. That the membership company has paid in full all amounts due to the PSE up
to the end of the fiscal year during which time the PSE issues its consent to
termination of membership.
3. The termination of membership, based on information and documents
presented to the PSE from the company or others of which the PSE has
possession, shall not adversely affect its customers or other member
companies or the PSE or the trading of securities in general.
Article (34)
1. The organizing committee shall recommend to the PSE either its approval to
terminating the membership of company as specified in articles (31-33) or its
initial denial to terminate.
2. The PSE shall submit the organizing committee recommendation to PCMA
either by approval or initial denial to terminate membership within a week
from the date from taking the decision.
3. The PCMA shall make the decision to terminate membership within 7 days
from the date of receiving the PSE recommendation.
Article (35)
If the membership company submits a request to terminate its membership from the
PSE and the PSE denies the request, the company may object to the decision
according to the Dispute-Settlement Rule, and until that time, the membership
company shall continue to conduct its business in a manner that safeguards the
interests of its customers and the PSE and other member companies and the public.
Membership Suspension
Article (36)
1. The CEO may, after the approval of the PCMA, decide, at any time, to
suspend the membership at the PSE temporarily, whereby it is prevented from
conducting some or all of its business.
2. The decision of the CEO to suspend membership must be justified and for
reasons that are not related to the termination of membership.
3. The CEO shall send to the membership company whose membership to be
suspended a notice at least one week prior to suspension and may, in
exceptional circumstances, suspend it immediately as in these events:
a. If the membership company engages in unlawful conduct such as false
trading or fraud or manipulation; or
b. If the membership company fails to pay amounts due to the settlement bank
in accordance with the Trading Rule.
Article (37)
The CEO shall refer the temporary suspension decision to the organizing committee
to review within 2 weeks from issuance.
Article (38)
When reviewing the temporary suspension decision, the organizing committee may:
1. Consider approving continued or uncontained the suspension, or amending the
conditions for the suspension.
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2. Set the conditions that the membership company must comply with to repeal
the decision of the CEO.
3. Revoke the CEO’s decision if it finds that it lacked justification.
Article (39)
1. The PSE may, at any time, to investigate the appropriateness of having a
membership company at the PSE continue its membership whether the
membership was suspended or not. The decision of the PSE must be justified.
2. The PSE may, subject to the recommendation of the organizing committee,
approve the suspension to an operating company for the period of time that the
company requests provided it does not exceed 2 consecutive years. A request
to suspend may not be repeated unless 5 years have lapsed.
Membership Cancelation
Article (40)
The Organizing committee may at a recommendation of the CEO and after the
approval of the PCMA, cancel the membership of any company at the PSE in these
events:
1. If it fails to meet the capital requirements stipulated in this Rule, within a
period of 6 months from the date the PSE requests.
2. The membership company is late in providing the letter of guarantee or is late
in paying due amounts to the PSE for more than 6 months despite the request,
however, the PSE may extend the period for another 6 months.
3. If the membership company or any of its staff were convicted of fraud or a
gross violation of the Law, the regulations, the instructions issued by the
PCMA and the PSE Rules.
4. The issuance of an administrative sanction of cancelation against the
membership company in accordance with the Law and the PSE Rules.
5. If the PSE determined that public interest is served by cancelation.
Article (41)
The membership at the PSE shall be automatically canceled in any of these events:
1. If the membership company stops it's trading activities or from providing
services related to securities either for a period of 3 consecutive or nonconsecutive months during the year, or the conversion of the membership
company to conduct other commercial activities.
2. Owning or acquiring the rights of others made at the account of disposing of
the assets and property of the membership company.
3. Transfer of ownership or disposition of 51% or more of the ownership of the
shares of the membership company to third parties.
4. Declaration of the membership company’s bankruptcy or its liquidation or its
inability to settle its debts or commercial liabilities or the application of any
party, whomsoever, to have it declared bankrupt or liquidated.
5. Revocation or non-renewal of the license of the membership company by the
PCMA. In the event that the PCMA amends the conditions for licensing, the
membership company commits to make the required adjustment accordingly
and during the period specified by the PCMA.
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Consequences for Termination and Suspension of Membership
Article (42)
The PSE, as it deems appropriate, may suspend the trading activities of a membership
company effective on the date when it requests to terminate its membership or when
one of the factors leading to revocation of membership occurs subject to a decision by
the organizing committee or in the event of automatic termination. In such instances,
the PSE may request from the concerned membership company to transfer all its
activities at the PSE to another membership company and/or undertake any
arrangements that the PSE requests and in the time period specified by the PSE. The
PSE, may, nevertheless, grant an additional period of time to the membership
company to settle the executed operations which have not been settled yet.
Article (43)
1. When the membership is terminated by a resolution from the organizing
committee or automatically, PSE shall return, in a time determined by the
PSE, to the membership company the letter of guarantee or any other money
belonging to the company which was deposited in the settlement guarantee
fund after deducting the amount due to the PSE including the membership
termination fee.
2. The PSE may not refund any money deposited in the joint compensation fund
or the cover provided to guarantee the settlement for daily trading at the PSE
unless it had satisfied all due amounts to the customers.
3. The membership company is not exempted from paying all its due amounts
before termination till the end of the fiscal year of termination, whether the
revocation was made by a decision of the organizing committee or when
membership automatically canceled.
Article (44)
When membership is suspended at the PSE:
1. The company shall remain obliged to pay the fees owed by it in accordance
with the Fees and Commissions Instructions.
2. The company shall remain obliged to keep the two letters of guarantee valid,
required this Rule, until it meets all its obligations towards the PSE, the
customers and other member companies.
Ownership
Change in the Ownership of the Membership Company
Article (45)
If the membership company was privet Shareholding Company, it must obtain the
approval of the PSE prior to transferring any of its shares.
Article (46)
The membership company may not issue new shares or change it capital structure
without the prior approval of the PCMA and the PSE.
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Acquisition of a Non-Membership Company
To a Membership Company
Article (47)
1. A non-membership company is deemed to have acquired a membership
company when it purchases 51% of its assets or these assets are merged with
the assets of a non-membership company in a matter that leads to the
termination of the membership at the PSE pursuant to article (41) of this Rule.
2. The non-membership company which acquired the membership company may
apply for membership at the PSE in accordance with this rule, and when the
following conditions are met:
a. If the membership requirements detailed in this Rule are present.
b. If it commits to satisfy all the obligations of the former membership
company towards the customers, the PSE and other membership
companies.
Acquisition of a Membership Company
By another Membership company
Article (48)
1. The PSE's prior approval is required for the acquisition of one Membership
Company by another where the acquisition is for more than 51% of the assets
of another member company or their merger.
2. The acquiring membership company commits to meet all the obligations of the
membership company whose assets has been wholly acquired or the majority
thereof towards its customers and the PSE and the other member companies,
and shall present a written undertaking to the PSE in this regards.
3. If the acquiring membership company of another membership company was
made through a combination, then the acquiring company commits to perform
all the obligations of the acquired company as stipulated in paragraph (2) of
this article.
4. If the merger was the result of forming a new legal person as a result of
dissolving both companies, the newly formed company, in addition to
provisions of paragraph (2) of this article, shall apply to membership at the
PSE in accordance with these Rules.
Consequences of Acquisition
Article (49)
The PSE, as it deems appropriate, may suspend the trading of the membership
company in accordance with the Law and the PSE Rules from the date it applies to
purchase or acquire to its assets. Accordingly, the PSE may require the concerned
membership company to transfer all its activities at the PSE to another membership
company and/or make any other arrangements that the PSE requests and during the
duration it specifies. The PSE may, nevertheless, grant an additional period to the
membership company to settle the executed operations which have not been settled
yet.
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Parties of the Membership Company at the PSE
Members of Board of Directors
Article (50)
1. The natural or legal person may be a member in the board of directors of the
membership company.
2. The natural person shall be reputable and of good moral standing and not
convicted of any offense or misdemeanor related to breach of honor or trust
unless discharged.
Article (51)
The percentage of the members of the board of directors who have knowledge of the
securities must not be less than 30% of the total members of the board of directors of
the membership company.
Management
Article (52)
No person may be appointed in management of the membership company unless that
person was reputable and of good moral standing and not convicted of any offense or
misdemeanor related to breach of honor or trust unless discharged.
Article (53)
The person to be appointed in management at the membership company shall have the
required qualifications for the job.
Article (54)
Each membership company shall nominate a general manager, a deputy general
manager, responsible for daily business.
Article (55)
Each membership company shall nominate a financial manager responsible for
following up its financial position and shall present reports to the PSE as stipulated in
this regulation and PSE Rules.
Article (56)
No person may hold more than two positions of those positions specified in the two
previous articles at the same time.
Article (57)
The membership company must have one headquarters and three branches, at least,
distributed in the Gaza Strip and three governorates in the West Bank.
Article (58)
The persons who hold the position of general manager, the deputy general manager,
or the financial manager may not work as a financial advisor for any of the customers
of the membership company.
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Article (59)
The salary base and bonuses for management positions must be set in a manner that
limits conflicts of interests between management and customers.
Staff of the Membership Company
Article (60)
The phrase “employment” includes any relationship whereby the employee commits
to provide services to the membership company for compensation in return for these
services. The employees subject to this category at the membership company include
these positions:
1. The executive staff.
2. Financial advisors.
3. Accredited brokers.
Article (61)
It shall be a requirement that the employee of the membership company have the
following:
1. Qualifications to perform the jobs.
2. That he has reached the age of twenty two (22) years and attained legal
capacity.
3. Be reputable and of good moral standing and not convicted of any offense or
misdemeanor related to breach of honor or trust unless discharged, and have
not been dismissed for cause or prevented from ever dealing in securities.
4. Be employed on a full time basis and not working in any capacity at a listed
company at the PSE or at another membership company or at the PSE or the
PCMA.
Article (62)
1. The PSE shall register the names of the employees of the membership
companies including financial advisors and accredited brokers and others
whom the PCMA has licensed.
2. The employee may not perform any of the functions mentioned in the previous
paragraph except through working for a membership company at the PSE.
Article (63)
The employee of the membership company may not provide financial advice to a
customer unless the employee were licensed by the PCMA and has obtained the prior
approval of the PSE to work as a financial advisor.
Article (64)
The financial advisor who has a license from the PCMA and the approval of the PSE
may perform his work provided that he is employed by a membership company and
works under its supervision.
Article (65)
The employee of the membership company may not perform any account opening
functions or customer trading accounts unless the membership company provides
prior written approval.
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Article (66)
The PSE shall supervise the employees of the membership company in a manner that
guarantees the safe operation of trading securities and the transfer of ownership for
the purpose of upgrading the level of activities, value added services and functions
that membership companies provide to the investing public.
Article (67)
The PSE shall administer the examinations and conduct the interviews and provide
training to ensure that the employees of the membership companies who are licensed
by the PCMA are qualified.
Article (68)
1. The PSE may suspend any employee of membership companies whether, were
financial advisors and accredited brokers and prevent them from dealing in
securities or from performing any supervising of dealing if the employee was
not licensed by the PCMA or unregistered at the PSE or for any other reason
as the CEO determines.
2. The suspension of the employee as stipulated in the previous paragraph shall
be for a reasonable time not exceeding 6 months from the date that the
membership company’s general manager was notified that the PSE has
suspended the employee.
Article (69)
1. The PSE may cancel the authorization of any accredited brokers working at a
membership company in these events:
a. If the period of suspension of the accredited brokers ends without rectifying
the causes for suspension.
b. If another serious cause was determined by the CEO.
2. The membership company may not appoint or continue to employee any
financial advisor whose license was revoked as stipulated in the previous
paragraph.
Article (70)
The membership company must notify the PSE immediately once it terminates any of
its employees or suspend them from work for any reason whatsoever, including leave
that exceeds 3 days whether with or without pay, and provide the reasons for
termination or suspension.
Article (71)
The membership company shall, immediately, when it knows that any of the
following has occurred, notify the PSE and the PCMA in details, irrespective of
whether proof was presented or not:
1. Any legal action or investigation made by security services or the penalty
committee against any accredited person or employees of the membership
company.
2. Any legal suit concerning the activities of an authorized person or employees
of the membership company.
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Article (72)
The PSE may amend the provisions of this Rule at any time. And the amended Rule
shall go into force when approved by the PCMA and on the date it specifies.
Article (73)
In the event of breach of any of the provisions of this Rule, the matter shall be
referred to the Dispute-Settlement Rule.
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Non-Listed Securities Trading Instruction
Issued Pursuant to Article (30/3) of the Membership Regulation
Article (1)
a. The securities of the company who is not listed in the regular market means the
shares of the public shareholding company which is in the process of making the
required adjustment to list the securities at the PSE.
b. Listing and Disclosure Rules does not apply non-listed securities transactions,
which apply to the securities listed in the regular market.
Article (2)
All membership companies are obligated to inform its customers with:
1. The characteristics of this market before dealing on it.
2. That the PSE is not responsible to disseminate information related to the nonlisted companies.
3. The protection that provided by the PSE to investors of companies listed in the
regular market is not available for non-listed companies whose securities are
not listed and traded on the non-regular market.
Article (3)
Member companies shall be responsible for the trading transactions they execute and
for compliance with the Law and the PSE Rules, especially the following:
1. Know your customer and verify the certificate of shares and the customer's
type and capacity to deal in securities.
2. Ensure that the dealing in securities is safe and free from deceit, fraud,
exploitation, or fictitious speculation.
Article (4)
The period for trading at this market shall be between ten in the morning to eleven
daily except Friday and Saturday, taking into account that there is no pre-open period
for this market.
Article (5)
The following is not permitted at this market:
1. Calculation of the close or open price for any security.
2. Placing price limits.
3. Calculation of a price index.
Article (6)
Bonds shall be treated in the same manner of shares without any change in the
information required for orders.
Article (7)
The PSE shall be responsible for publishing the following reports:
1. Publish trading information in the daily bulletin which included the number of
transactions, volume, and value for all executed transactions, and highest and
lowest trading price for each security without calculating an average price.
2. Publish trading information in the monthly bulletin which contains the same
information currently reflected for listed companies.
3. Issue ownership certification for shareholders that buy.
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4. Print reports of ownership and send them to issuers upon request.
Article (8)
Trading in non-listed securities in this market shall be subject to the approval of the
board of directors of the PSE.
Special Provisions for Market Orders (Parallel Market)
Article (9)
Customer orders issued for executing membership companies in this market shall be
in accordance with the requirements of the form issued by the PSE, and they shall, in
writing, specify that these orders are specific to this market and that trading concerns
unlisted securities.
Article (10)
The same priority rules stipulated in the Trading Rule for securities listed on the
regular market shall be applied.
Article (11)
Orders shall be entered through the screens of the membership companies.
Article (12)
The specific factors for this market are:
1. Transactions shall be executed from the computers of member companies.
2. Settlement operations shall be the same as for listed securities.
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