The Canadian Depository for Securities (CDS) – the world’s oldest securities depository – is gearing up to begin distribution of information services beyond its membership base. The depository is introducing direct availability of its corporate actions and other relevant data it collects to non-members.
CDS handles all Canadian debt and equity markets, including private issues, and list and over-the-counter transactions. (The depository says it plans to expand instrument coverage further over time.). It maintains security master files, entities and corporate actions data.
The CDS has for over 10 years provided information on these markets to its participants – which make up around 70% to 80% of the Canadian market – for clearing and settlement purposes. The data has also been available via vendors including Reuters and Bloomberg, although the CDS currently has little knowledge of client access via these third-parties. The depository also works with redistributors such as Exchange Data International and Xcitek. In fact, a new interface for CDS’s ISO 15022 messages in the Xcitek platform has just concluded testing and is set for release soon.
Now, according to Barbara Amsden, marketing director at the CDS, the group believes that there exists a far wider audience for direct access to its services.
The emergence of new technologies and data standards has been an evolving driver in the case for expanded distribution of its information. She says that with technologies like FTP and secure web access, and with standards like ISO 15022, it’s becoming easier and more cost-effective to reach wider audiences than has been feasible historically.
The depository recently introduced delivery of its corporate actions data in the ISO 15022 format, available via Swift, FTP and the CDS’s own proprietary network. The data is also available as an end-of-day file for those not needing real-time messages. CDS has additional plans for new delivery mechanisms for its data over time. Says Mihai Radu, senior business analyst, “We are striving to offer all of our services in a standardized way, so we can improve timeliness and straight through processing for our customers.”
The depository is also Canada’s national numbering agency, charged by ANNA with assigning ISIN identification codes to Canadian securities, based on the Cusip nomenclature, including country code and check digit. This data is now being made available as a tab delimited file via FTP, updated daily, for use within clients’ security master files.
It also maintains Sedar, the Canadian equivalent of the U.S. Edgar corporate filing system.This data is available free of charge with 24 hours delay for private investors. A higher level of service with no delay is available via a secure connection to the CDS’s Bulletins service.
CDS says it doesn’t plan to move into the market pricing information area, since this is already handled by the likes of Reuters, Bloomberg and the Toronto Stock Exchange.
Regulations are a Treat
As with the U.S. and Europe, though to a lesser degree, regulations are having an impact on the Canadian marketplace. Within Canada, the Ontario Securities Commission is pushing participants for audit trail information under the proposed Treats – Transaction Reporting Electronic Audit Trail System – regulations, with a deadline of early 2007. There is also a Same-day Matching Rule by the same body, expected to be in place in early 2006. These of course impact on reference data requirements.
While other regulatory moves, such as Know Your Client and Anti-Money Laundering, aren’t as pervasive as they are in the U.S. marketplace, there is a broad market desire to comply with the spirit of these initiatives, due in part to the fact that Canada sees itself as part of the North American marketplace rather than as an isolated marketplace. Moreover, with many of the Toronto exchange’s listed corporations also listed on other markets, there is a need to be aware of and comply with market conventions in other financial centers.
But while Canada is keen to ensure it marches to the same drum as its major peer markets, its character is markedly different from that of its southerly neighbour. Canadian market participants pride themselves on what they see as the default to good corporate governance within their market. With its need to deal with markets internationally, Canada’s market players recognized the requirement for data integrity early in the game.
Achieving more efficient data quality may be easier in Canada’s relatively smaller environment. There are approximately 200 brokers in Canada, only three major custodians, no more than 10 transfer agents (compared with around 1,200 in the U.S.) and between 500 and 700 institutional investment firms. Toronto is the major market center, with Calgary and Montreal as adjuncts.