CDS Rule Amendment Notice - Technical Amendments to CDS Procedures - Buy-in Cease Trade

Market Regulation Document Type
Canadian Depository for Securities Limited (CDS) rule review

CDS CLEARING AND DEPOSITORY SERVICES INC. (CDS®)

TECHNICAL AMENDMENTS TO CDS PROCEDURES

BUY-IN CEASE TRADE

NOTICE OF EFFECTIVE DATE

A. DESCRIPTION OF THE AMENDMENTS

Background

When a Continuous Net Settement ("CNS") eligible security is in a "cease trade" status, the current CDSX® Buy-In function will still accept Buy-In Intent requests and charge participants at all stages of the Buy-In process, even though the Buy-In trade cannot be executed on the floor of the TSX Venture Exchange.

The CDS Strategic Development Review Committee ("SDRC") Equity subcommittee has requested that Intent to Buy-In trades associated with securities in a "cease trade" status be suppressed from going to an execution status in the Buy-In function. The enhancement would block these trades at the entry stage by receiving Listing Changes files from the TSX Venture Exchange, and introducing a "cease trade" indicator in CDSX Security Master File ("SMF") function. Once flagged, the indicator would prevent entry of Intent to Buy-In trades on the specified security, and eliminate unnecessary associated fee invoicing.

The Procedures marked for the amendments may be accessed at the CDS website at:

http://www.cds.ca/cdsclearinghome.nsf/Pages/-EN-blacklined?Open

Description of Proposed Amendments

The following procedures will be impacted by this initiative:

CDSX Reporting Procedures:

- Chapter 7 Buy-in Reports, Section 7.2

CDSX Procedures and User Guide:

- Chapter 3 Issue Activities, Section 3.6.5

Trade and Settlement Procedures:

- Chapter 9 Buying in Outstanding CNS Positions, Section 9.1

B. REASONS FOR TECHNICAL CLASSIFICATION

The amendments proposed pursuant to this Notice are considered technical amendments as they are matters of a technical nature in routine operating procedures and administrative practices relating to the settlement services.

C. EFFECTIVE DATE OF THE RULE

Pursuant to Appendix A ("Rule Protocol Regarding The Review And Approval Of CDS Rules By The OSC") of the Recognition and Designation Order, as amended on November 1, 2006, and Annexe A ("Protocole d'examen et d'approbation des Règles de Services de Dépot et de Compensation CDS Inc. par l'Autorité des marchés financiers") of AMF Decision 2006-PDG-0180, made effective on November 1, 2006, CDS has determined that these amendments will be effective on September 15, 2008.

These amendments were reviewed and approved by the SDRC on July 31, 2008.

D. QUESTIONS

Questions regarding this notice may be directed to:

Eduarda Matos

Legal Counsel

The Canadian Depository for Securities Limited

85 Richmond Street West

Toronto, Ontario M5H 2C9

Telephone: 416-365-3567

Fax: 416-365-1984

e-mail: [email protected]

JAMIE ANDERSON

Managing Director, Legal