On May 20, the OSC published a request for comment on proposed amendments to the CDS Rules that would require participants to withdraw securities from the CDSX system in uncertificated format where the issuer offers a direct registration system. The notice provides a description of how the paperless processing would work:
Under the amended Rules, when a participant withdraws a security from CDSX and the issuer uses DRS (direct registration system), CDSX will default the withdrawal request to DRS format instead of a physical certificate; the participant will not have the option to choose certificated format for the withdrawn securities. The transfer agent will not deliver a physical certificate evidencing the withdrawn security. Instead, the transfer agent will issue a statement to the new registered holder of the withdrawn security confirming that the security has been transferred and is now registered in the name of the new holder (generally the participant's customer).
The proposal is intended to progress the objective of paperless processing of securities transactions and holdings.
Meanwhile, another notice released the same day proposed allowing CDS to establish limited exemptions to the requirement that all entitlements on eligible securities be paid by an acceptable electronic means. While the requirement is scheduled to become effective on November 1, 2011, CDS determined that not all issuers and agents are yet able to comply with the requirements.
Both proposals are open for 30-day comment periods.
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