About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

DTCC Extends to Dividend, Redemption and Reorganisation Services for Canada

Subscribe to our newsletter

The Depository Trust & Clearing Corporation (DTCC) has enhanced its settlement link with CDS Clearing and Depository Services to offer new corporate action services including dividend, redemption and reorganisation services. Patrick Kirby, DTCC managing director for Asset Services, explains to Reference Data Review that the expansion of the services in this area is a result of customer demand.

The Canadian-Link Services, which went into operation in 2005, supports the processing and settlement of transactions in Canadian dollars at the Depository Trust Company (DTC), a DTCC subsidiary. “DTCC launched the Canadian-Link Services to better serve our customers who, at the time, had to maintain split inventories in Canadian and US securities,” explains Kirby. “The service allowed them to concentrate all US and Canadian security positions in their account at the DTC.”

The decision to expand Canadian-Link services was taken in response to customers who said they wanted DTC to offer additional corporate actions services, he says. Under the original program, DTC customers could clear and settle Canadian dollars at DTC, but they had to turn to CDS or other custodians for corporate actions.

“They were looking for ‘one stop’ shopping and wanted to do it at DTC. The expansion enables DTC customers to receive and make payments on all corporate actions events for eligible Canadian issues – approximately 1,000 are now eligible – including tender offers and rights issues in Canadian dollars or a mix of US and Canadian dollars,” continues Kirby.

The DTCC started the development process for the new services at the end of last year and put the new systems into place in July. “We were able to leverage existing systems and adapt them for the Canadian-Link,” he says.

Kirby believes that the new services significantly expand the Canadian-Link Services programme by offering DTC customers new processing capabilities for income, redemption and corporate action payments. For interest and dividend payments, DTC customers also can take advantage of DTC’s Elective Dividend Service (EDS).

With EDS, DTC customers will be able to obtain ‘at-source’ tax relief for Canadian issues, which allows them to pay the lower tax rate at the time of a dividend payment, rather than a higher or maximum rate. This allows investors to eliminate the expensive and time consuming processing associated with cross border hard copy tax reclamation, claims Kirby. “It also limits the interfaces and the repositioning they will have to do, streamlining cross border trading and making clearance and settlement and corporate actions processing more efficient.”

He is confident that the take up of the new services will be strong due to its foundation in customer requests. “Our customers came to us with the request for additional corporate action services, and we developed them based on customer feedback. We won’t have to encourage these customers to get on board,” he says.

Over the next few months the DTCC will be working on creating some additional automation such as cash settlement reporting on the link, adds Kirby.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: ESG data sourcing and management to meet your ESG strategy, objectives and timeline

ESG data plays a key role in research, fund product development, fund selection, asset selection, performance tracking, and client and regulatory reporting, yet it is not always easy to source and manage in a complete, transparent and timely manner. This webinar will review the state-of-play on ESG data, consider the challenges of sourcing and managing...

BLOG

ESG Data Keeps on Evolving, but are Financial Institutions Keeping Pace?

By Yann Bloch, head of product and pre-sales Americas at NeoXam. Earlier this month, Bloomberg published their much-anticipated annual European ESG Data Trends Survey report, carrying with it some fascinating findings on the current state of the market. The survey, taken by respondents from London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris, and Milan throughout 2023, posed questions about...

EVENT

AI in Capital Markets Summit London

The AI in Capital Markets Summit will explore current and emerging trends in AI, the potential of Generative AI and LLMs and how AI can be applied for efficiencies and business value across a number of use cases, in the front and back office of financial institutions. The agenda will explore the risks and challenges of adopting AI and the foundational technologies and data management capabilities that underpin successful deployment.

GUIDE

ESG Data Handbook 2022

The ESG landscape is changing faster than anyone could have imagined even five years ago. With tens of trillions of dollars expected to have been committed to sustainable assets by the end of the decade, it’s never been more important for financial institutions of all sizes to stay abreast of changes in the ESG data...