On November 26, 2008, the Canadian Depository for Securities (CDS) proposed a rule change for public comment that would require issuers of all CDSX eligible securities to electronically submit Canadian and United States (US) entitlement payments, including dividends, interest and redemption proceeds by using:
•Large Value Transfer System (LVTS) for Canadian funds
•Fedwire for US funds
•Other methods that result in immediate, irrevocable and final credit to CDS’ account at Bank of Canada
If approved, this change will be effective November 1, 2011. The new rule also requires all Canadian issuers to make their entitlement payments in electronic format regardless of the value amount. (Currently there is a $25 million entitlement payment minimum amount for electronic submission.) If issuers do not submit their entitlement payments electronically, their securities will be made ineligible for the CDS Depository Service.
Issuers who are not familiar with or do not use LVTS would be most affected by this change. This is because issuers would be required to directly remit funds electronically to CDS, rather than through CIBC Mellon.
D.C.