The leading knowledge platform for the financial technology industry
The leading 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: Adverse media screening – how to cut exposure to criminal activity, from money laundering to human trafficking

Screening for adverse media coverage of counterparties presents an incredible opportunity for financial institutions to limit risk exposures and identify bad actors early. It is required by regulations such as the EU’s sixth Anti-Money Laundering Directive (AML 6), and is one of the most effective ways to steer clear of potential connections with sanctioned activity...

BLOG

How Easy Access to Trusted Data Drives Operational Efficiency for Finance Firms

By Neil Sandle, Head of Product Management, Alveo. Today, we’re seeing rapid growth in data volumes and in data diversity within financial services firms. Different trends contribute to this growth of available data across the sector. One driver is that firms need to disclose more in order to comply with the continuing push towards regulatory...

EVENT

Data Management Summit Boston (Redirected)

As investment management firms take on more responsibility and control over core operational functions, A-Team has seen demand for a more buy-side oriented event focused on data and data management. The inaugural DMS Boston will take place in June 2020, and will focus on topics of interest to buy-side practitioners.

GUIDE

Regulatory Data Handbook 2021/2022 – Ninth Edition

Welcome to the ninth edition of A-Team Group’s Regulatory Data Handbook, a publication dedicated to helping you gain a full understanding of regulations related to your organisation from the details of requirements to best practice implementation. This edition of the handbook includes a focus on regulations being rolled out to bring order and standardisation to...