DTCC ADDS CORPORATE ACTIONS TO CANADIAN CLEARING LINK

Posted August 25, 2008

NEW YORK – The Depository Trust & Clearing Corporation (DTCC) has enhanced its settlement link with CDS Clearing and Depository Services Inc., Canada’s national securities depository, to offer new corporate action benefits including dividend, redemption and reorganization services.

The new corporate action capabilities became available in July through The Canadian-Link Services, which the DTCC established in 2005 via its Depository Trust Company (DTC) subsidiary to process and settle transactions in Canadian dollars. The link services eliminate the need to maintain split inventories in Canadian and US securities and allow customers to concentrate US and Canadian security positions in their DTC accounts.

“The new services significantly expand the Canadian-Link Services program by offering our customers new processing capabilities for income, redemption and corporate action payments, and it gives them the option of settling in either US or Canadian dollars,” says Patrick Kirby, Managing Director for Asset Services at DTCC. “Many of the banks and broker-dealers participating in Canadian-Link Services requested that we expand our custodial duties to bring further efficiencies to their work processes.”

The expansion enables DTC customers to receive and make payments on all corporate actions events for eligible Canadian issues – about 1,000 are now eligible – including tender offers and rights issues in Canadian dollars or a mix of US and Canadian dollars.

DTC is also offering an Elective Dividend Service providing “at-source” tax relief for Canadian issues, under which investors can pay the lower tax rate at the time of a dividend payment rather than the higher or maximum rate that requires a tax reclaim to recover the over-withheld amount. This allows investors to eliminate the expensive and time-consuming processing associated with cross-border hard-copy tax reclamation.

“In addition to the tax advantages the new settlement system offers, the expanded settlement process that DTC has initiated will make for one-stop shopping for many participants,” says Kirby. “It limits the interfaces and the repositioning they will have to do, streamlining cross-border trading and making clearance and settlement and corporate actions processing more efficient.”