CDS Rule Amendment Notice — Technical Amendments to CDS Procedures - Acceptor Ability to Change Trade DK Status

CDS CLEARING AND DEPOSITORY SERVICES INC. (CDS®)

TECHNICAL AMENDMENTS TO CDS PROCEDURES

ACCEPTOR ABILITY TO CHANGE TRADE DK STATUS

NOTICE OF EFFECTIVE DATE

A.       DESCRIPTION OF THE AMENDMENTS

Background

The CDS Strategic Development Review Committee (“SDRC”) Debt subcommittee has requested these enhancements to CDSX in order to expedite the settlement of trades.

When an Acceptor of a trade does not recognize a non-exchange trade that has been reported to them on CDSX, they update the trade status to 'DK' (Don't Know). The Submitter of the trade must then validate the details and change the trade status back to 'U' (Unconfirmed) before the Acceptor can 'C' (Confirm) the trade for settlement.

Frequently an Acceptor receives trade instructions from a client after updating the status of the trade to ‘DK’. Notwithstanding that the Acceptor then has instructions and recognizes the trade, the Acceptor must still wait for the submitter to change the trade status to “U” and then the Acceptor can confirm the trade.

In order to expedite the settlement of trades, the SDRC Debt subcommittee has requested that the edit on non-exchange trades will be changed to allow the Acceptor to update the status from ‘DK’ to ‘C’ status.

DetNet trades are outside the scope of this amendment. When the original non-exchange trade is created, the Acceptor will have the ability to update the trade status to 'DK' and then to ‘C’ as described above. However, once the confirmed non-exchange trade has been picked up by the DetNet system because the two parties and the security involved are DetNet eligible, a system generated netted transaction is created with ZNET (an internal CDS CUID) as one side of the trade. This system generated trade (referred to as a DetNet trade) is what is being excluded from the scope of this amendment, as it was already confirmed by the Acceptor prior to being processed by the DetNet system.

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:

Trade and Settlement Procedures:

• Chapter 4 Non-Exchange Trades, Section 4.7
• Chapter 7 Matched Institutional Trade Interface, Section 7.3

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 become effective on a date subsequently determined by CDS, and as stipulated in the related CDS Bulletin.

These amendments were reviewed and approved by the SDRC on September 25, 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