DTCC's Canadian-Link Services with the CDS Clearing and Depository Services Inc. (CDS) provide a broad range of services supporting settlement and corporate actions including dividend, redemption and reorganization services.

Overview

Launched in 2005, DTCC's Canadian-Link Services initially supported the processing and settlement of transactions in Canadian dollars at The Depository Trust Company (DTC), a DTCC subsidiary. This service eliminated problems associated with maintaining split inventories in Canadian and U.S. securities and enabled participants to concentrate all U.S. and Canadian security positions in their DTC accounts.

In 2008, services were expanded to include new processing capabilities for income, redemption and corporate actions payments with the aim of providing "one-stop" shopping for DTC participants. The new services include dividends, redemptions, including full call, and maturities excluding municipal event types, and reorganizations including rights, warrants, voluntaries and mandatory events.

Also in 2008, DTC implemented a procedure to permit participants to deliver "Foreign Securities" between DTC participants, enabling intra-DTC deliver orders.

Who Can Use the Service

All eligible and qualified DTC members, both broker-dealers and banks, can use Canadian-Link Services, but they must be participating in the program.

Benefits

Canadian Link Services:

• Benefits participants with a single depository interface for U.S. and Canadian dollar transactions, reducing cross-border processing costs and inefficiencies.
• Enhances custodial services with expanded processing capabilities for income, redemption and corporate action payments.
• Enables participants to receive and make payments on all corporate action events for eligible Canadian issues including tender offers and rights issues in Canadian dollars or a mix of U.S. and Canadian dollars.
• Provides the option of settling in either U.S. or Canadian dollars.
• Enables participants to concentrate all U.S. and Canadian security positions in their DTC account, eliminating the need to maintain split inventories, which would require repositioning in preparation for corporate action events.
• Provides tax benefits that allow DTC participants to obtain "at-source" tax relief for Canadian issues. ("At-source" relief allows participants to pay the lower tax rate at the time of a dividend payment rather than a higher or maximum rate, which would require a customer to file a tax reclaim to recover the over-withheld amount.)

How the Service Works

New voluntary announcements have been created to process Canadian dollars. The announcements will be updatable as information is received. A complete announcement encompasses the body of the RIPS envelope, the pay rates and any comments added by operations.

Redemption and voluntary reorganization event elections will be made through the existing tender offer processor (PTOP). All rights and warrant processing will be done through existing rights and warrant functions (PSOP and WARR). Current payment allocation functionality will be updated to provide a view of allocated items (SDAR) – including dividend payments as well.

Additional end-of-day reports will be generated for customer reconciliation purposes.

For More Information

Please contact Relationship Management at 800-422-0582.