Industry

CDS CLEARING AND DEPOSITORY SERVICES INC. (CDS®)

TECHNICAL AMENDMENTS TO CDS PROCEDURES

WR961 SEPARATE IRS FILINGS AT LEDGER / EIN LEVEL

NOTICE OF EFFECTIVE DATE

A. DESCRIPTION OF THE CDS PROCEDURE AMENDMENT

Background

Currently, CDS performs annual 1042-S withholding tax reporting to the IRS for its participants that are Qualified Intermediaries (QIs) by compiling tax transactions for the participant's entire ledgers rolled up to the company level. Since IRS QI codes are assigned to individual IRS Employer Identification Numbers (EINs){1} and a CDS participant company can have more than one EIN, CDS was asked to revise its reporting to allow participants to receive their tax withholding activities at a more detailed level -- at participant ledger or by EIN number.

On a monthly basis, CDS participants are provided with a company-level 1042-S reporting file, which reports cumulatively on U.S. taxes withheld on their behalf for the year (based on their QI status and their tax elections), 1042-S income and any tax information related to the IRS section 302 regulation. Going forward, participants will be able to choose the level at which this information is to be reported -- company, ledger or EIN number.

Access the proposed amendments to the CDS Procedures on the User documentation revisions web page (http://www.cds.ca/cdsclearinghome.nsf/Pages/-EN-blacklined?Open) and to the CDS Forms (if applicable) on Forms online (Click View by Form Category and in the Select a Form Category list, click External review) on the CDS Services web page (www.cdsservices.ca).

Description of Proposed Amendments

The proposed amendments describe the change to level of detail that will be available for the 1042-S reporting file, and will require changes to:

CDSX Procedures and User Guide
Chapter 8: 1042-S reporting -- detail file

CDS Procedure Amendments are reviewed and approved by CDS's Strategic Development Review Committee ("SDRC"). The SDRC determines or reviews, prioritizes and oversees CDS-related systems development and other changes proposed by participants and CDS. The SDRC's membership includes representatives from the CDS Participant community and it meets on a monthly basis.

These amendments were reviewed and approved by the SDRC on September 16, 2010.

B. REASONS FOR TECHNICAL CLASSIFICATION

The amendments proposed pursuant to this Notice are considered technical amendments as required to ensure consistency or compliance with an existing rule, securities legislation or other regulatory requirement.

C. EFFECTIVE DATE OF THE CDS PROCEDURE AMENDMENT

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

D. QUESTIONS

Questions regarding this notice may be directed to:

Laura Ellick

Manager, Business Systems Development & Support

CDS Clearing and Depository Services Inc.

85 Richmond Street West

Toronto, Ontario M5H 2C9

Telephone: 416 365-3872

Fax: 416 365-9625

e-mail: lellick@cds.ca

{1} An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is used to identify a business entity.