DTCC to establish settlement link with Canadian Depository for Securities

Subject to regulatory approval, the new link, the first DTC link to support settlement in a foreign currency, will be implemented by year-end to provide DTC customers with a single depository interface for U.S. and Canadian dollar transactions. This will reduce cross-border processing costs and inefficiencies by eliminating problems associated with maintaining split inventories in Canadian and U.S. issues. In split inventories, some portion of a position in a dually listed issue is maintained with CDS for Canadian dollar settlement and the remainder is with DTC for U.S. dollar settlement. The new link will permit DTC customers to concentrate all U.S. and Canadian security positions in their DTC accounts.

"Since the early 1980s, DTCC's subsidiaries and CDS have developed linkages and close working relationships," said Thomas Costa, DTCC managing director and general manager for Equity Clearance and Settlement. "These links between CDS and DTCC are among the most robust inter-market links in the world, processing more than a million transactions each month. But up until now, these links only supported transactions conducted in U.S. dollars."

The link, which will be implemented using a DTC omnibus account at CDS, will support transactions sent by a DTC participant to a CDS broker or custodian, as well as those sent by CDS brokers and custodians to DTC participants. It will also support Canadian dollar transactions between DTC participants. A group of select pilot participants will test the link in the fourth quarter, and it is planned to be made available to all DTC customers at the end of the year.

As with U.S. dollar transactions, customers' security positions received via Canadian dollars will immediately be available for redelivery in DTC. DTC also has developed an end-of-day settlement process to settle Canadian dollar obligations.