The Canadian Securities Administrators (CSA) have made amendments to National Instrument 24-101 Institutional Trade Matching and Settlement and Companion Policy 24-101CP Institutional Trade Matching and Settlement (together, NI 24-101) which are expected to come into force on July 1, 2010.
The key amendment to NI 24-101 is that the current requirement to match DAP/RAP trades by no later than noon on the business day following the trade date (noon on T+1) will be maintained. CSA staff recognize that continuing to move towards an institutional trade matching (ITM) deadline of midnight on T is not justified from a cost-benefit perspective without a clear indication that the standard T+3 settlement cycle in North American and global capital markets would be shortened.
As a result, NI 24-101 will no longer provide for a transition to an ITM midnight on T deadline. Ontario Securities Commission Rule 24-502 Exemption from Transitional Rule: Extension of Transitional Phase-In Period in National Instrument 24-101 -- Institutional Trade Matching and Settlement, will be revoked as of July 1, 2010, and other jurisdictions will likewise repeal or revoke their local rules or blanket orders concurrent with the amendments coming into force.
Some other important amendments to the NI 24-101 include the following:
- the definition of "institutional investor" has been changed to mean "a client of a dealer that has been granted DAP/RAP trading privileges by the dealer";
- a definition for "North American region" has been added to mean "Canada, the United States, Mexico, Bermuda and the countries of Central America and the Caribbean", replacing the imprecise term "western hemisphere";
- the definition of "trade-matching party" has been amended in two ways: (a) to include a registered adviser only where it is acting for the institutional investor in processing the trade, and (b) to exclude institutional investors that are (i) individuals or (ii) persons or companies with total securities under administration or management not exceeding $10 million;
- a registered dealer's or registered adviser's policies and procedures must be designed to encourage trade-matching parties to (i) enter into a trade-matching agreement with the dealer or adviser, or (ii) provide or make available a trade-matching statement to the dealer or adviser. If the dealer or adviser is unable to obtain a trade-matching agreement or statement from a trade-matching party, it should document its efforts in accordance with its policies and procedures;
- the ITM deadline for a registered dealer is noon on T+1 following the execution of a trade, or alternatively noon on T+2 where the order or settlement instructions are made in or communicated from a geographical region outside of the North American region;
- the ITM deadline for a registered adviser acting for an institutional investor in processing the trade is noon on T+1, or alternatively noon on T+2 where the institutional investor providing settlement instructions is in a geographical region outside of the North American region; and
- the exception reporting requirement has been modified such that a registered firm is required to file Form 24-101F1 no later than 45 days after the end of a calendar quarter if: (a) less than 90 per cent of the DAP/RAP trades executed by or for the registered firm matched by the ITM deadline, or (b) the DAP/RAP trades executed by or for the registered firm during the quarter that matched within the ITM deadline was less than 90 percent of the aggregate value of the securities purchased and sold in those trades.
Registered firms may complete their Form 24-101F1 on-line on the CSA's website at the following URL addresses: