CDS Clearing and Depository Services Inc. is continuing to push toward paperless processing of securities transactions.
The firm said today that, as of November 1, it will no longer accept paper cheques for entitlement payments, and it won’t permit physical certificate withdrawals for issuers that have an active direct registration system program.
CDS notes that, since its inception, it has pursued paperless processing. “The benefits of going paperless include the reduction of overall industry processing, holding costs for processing securities transactions, cost of replacing lost certificates and most importantly the reduction of risks,” it says.
The firm says that eliminating the use of cheques for entitlement payments provides greater efficiency and risk reduction to CDS, and therefore to the financial services industry as a whole. After Nov. 1, securities will not be eligible in CDSX unless entitlements on that security are paid electronically. CDS says that its intent to implement this new requirement was first communicated in 2008 in order to provide ample opportunity for issuers, paying agents and their bankers to make the necessary system and process changes.
Reducing the number of physical certificates issued will reduce the resulting costs in handling and transference, it says; noting that the change regarding physical certificates only applies to withdrawals, it will continue to accept certificates for deposit.