The Investment Dealers Association of Canada has issued an update on the efforts of both the Canadian Capital Markets Association and the IDA to facilitate the straight through processing readiness in the Canadian market.
The CCMA has announced a shift in priorities away from a broad range STP awareness to specifically focusing on creating a framework to enable the matching of institutional trades on trade date. To achieve this shift, the CCMA has changed its governance structure to an institutional trade match governance structure. This shift will allow the CCMA to focus its future efforts on the area that is thought will benefit the most from the use of STP. F
The IDA’s main STP focus is on rulemaking. In Canada, STP rulemaking initiatives are underway at: the Canadian Securities Administrators; the self-regulatory organizations, including the IDA; and the Canadian Depository for Securities Limited.
A proposed CSA STP rule was published for public comment on April 16. The IDA says that one of the key issues raised in the proposed CSA STP rule is whether SRO STP rules would be more effective than a CSA rule.
“The IDA’s view is that, given that we will be charged with enforcing any STP rule that is adopted, the STP rule that applies to IDA member firms should be a SRO STP rule. We do however recognize that a CSA STP rule would cover more institutional market participants,” it notes.
An alternative to exclusive CSA or SRO rulemaking is adopting complementary CSA, SRO and CDS rules, the regulator says. This could be achieved by either: adopting general principle STP rules at the CSA level and adopting more procedural/prescriptive rules at the SRO and CDS levels; or, excluding the application of any CSA STP rules to SROs and their members, where an equivalent SRO STP rule has been adopted.
To sort through this and other issues, the IDA is actively involved in the work of the CCMA Legal/Regulatory Working Group. Using this forum, and others, the IDA intends to develop a SRO STP rule to help firms become STP ready without the rule creating significant business disruption. To achieve this, a rule phase-in period, in line with the CCMA institutional trade matching targets will be necessary, it says.