CDS Rule Amendment Notice - Technical Amendments to CDS Procedures Relating to ATON Participant Procedures

CDS CLEARING AND DEPOSITORY SERVICES INC. (CDS®)

TECHNICAL AMENDMENTS TO CDS PROCEDURES

ATON PARTICIPANT PROCEDURES

NOTICE OF EFFECTIVE DATE

A. DESCRIPTION OF THE CDS PROCEDURE AMENDMENT

This procedure amendment is being put forward at the request of the CDS Strategic Development Review Committee (“SDRC”) Tax subcommittee. The SDRC determines or reviews, prioritizes and oversees CDS-related systems development and other changes proposed by CDS and CDS participants. Its membership includes representatives from the CDS participant community, and it meets on a monthly basis. The SDRC has four separate sub-committees each with its own membership and meeting schedule: the SDRC Equity Sub-committee, the SDRC Debt Sub-committee, the SDRC Entitlement Sub-committee and the SDRC Tax Sub-committee.

This procedure amendment is designed to improve the CDS ATON service and processes. CDS has been requested to make changes to the CDS ATON service to add two new fields to CDS 3270 screens, ATON reports and Interlink messages to allow for additional transfer of account details to be reported.

These two new fields will provide additional details for users to identify transfers that require tax reporting information that needs to be sent to the Canada Revenue Agency “CRA”. Additionally the fields will allow users to identify transfer of accounts for marriage breakdown, new versus old Ontario LIF account transfers, restricted and normal transfers, therefore allowing for better reconciliation, primarily for any tax reporting a user may have to make to the CRA on behalf of the client.

The first of the two new fields “Marriage Breakdown” will allow users to identify if the transfer of account is a regular transfer of account or if the transfer is as a result of Marriage Breakdown. When the user defines a Request for Transfer “RFT” as related to a Marriage Breakdown the resulting CDSX trades will be created as Marriage Breakdown ‘MB’ trade type, and not the current Account Transfer ‘AT’ trade type ATON activity not identified as marriage breakdown will continue to be reported as ‘AT’ trades.

The second field “Trans Subtype” will allow the user to identify additional details related to the transfer of account. Values that can be used will identify if the transfer is a normal transfer, a restricted transfer, a new Ontario Life Income Fund “LIF” transfer or an old Ontario Life in Income Fund transfer.

In order to allow participants and Service Bureaus sufficient time to make the appropriate changes to their systems, the use of these two new fields will be phased in. To start, it will not be mandatory for users to populate these new fields however a user can use the new fields if they choose to. The Transaction Subtype field will be defaulted to blank, or populated at the user’s option with any of the new applicable values. The Marriage Breakdown field will be defaulted to N, or if a user decides to use the new field can be updated with a Y to indicate the transfer is for Marriage Breakdown.

At a future date, when advised by the SDRC Tax Committee overseeing these changes, the fields will become mandatory and all system edits will apply.

The CDS 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

ATON Participant Procedures
Ch 3: Request for transfer (receiver procedures)
      s 3.1 Entering RFTs
      s 3.1.1 Approving a draft
      s 3.2 Inquiring on RFTs
Ch 4 Request for transfer (deliverer procedures), s 4.4 Entering residual RFTs
Ch 6 Field values, s 6.1 RFT screens
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 SRDC’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 April 30, 2009

B. REASONS FOR TECHNICAL CLASSIFICATION

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

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:
 

Aaron Ferguson
Senior Product Manager, Product Support
CDS Clearing and Depository Services Inc.
85 Richmond Street West
Toronto, Ontario M5H 2C9

Telephone: 416-945-8977
Fax: 416-365-7691
e-mail: [email protected]