Straight Talk  

CDS rule to improve the efficiency of delivery and settlement of large value debt trades

The June 2007 edition of Trade Talk announced that the Canadian Depository for Securities (CDS) had been working with several dealers and asset servicing providers, including CIBC Mellon, to identify opportunities to improve the efficiency of the delivery and settlement of large value debt trades.

To achieve this goal, the dealer community proposed a “street standard” that would require both Canadian and U.S. denominated debt trades to be split and reported to CDS for settlement and delivery with a maximum par value of $50 million.

On July 10, 2007, CDS issued a bulletin notifying participants of its intention to implement this new rule effective Sept. 10th, 2007. Any debt trades entered on or after this date will be subject to the $50 million par value edit during the trade entry process. As a result, clients and investment managers must ensure that trade information is relayed to CIBC Mellon in the same splits (all $50 million and a tail amount) as are reported to CDS by the broker to ensure trades can auto match and settle. Failure to do so will result in settlement delays and possibly in failed trades.

If you have any questions or would like more information, please contact your relationship manager.

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Straight Talk is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness. Readers should be aware the content of this publication should not be regarded as legal, accounting, investment, financial or other professional advice nor is it intended for such use.