ACSDA Leadership ForumACSDA Leadership Forum

CDS International Links

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Overview

Drivers for Access to Foreign Markets International Strategy Canada - U.S. Links/Services DTC Canadian Dollar Settlement Service JASDEC Link SEB Link Euroclear France Link Euroclear UK Direct Service International Message Hub Possible future links

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Drivers for Access to Foreign Markets

Canadian issuers seeking cheaper, more liquid financing sources

Elimination of foreign property rule in 2005 has increased Canadian investor interest in foreign investments

Canada’s strong economy and global demand for natural resources has made Canadian companies and markets attractive destinations for foreign investment

Increased interest in dual listing of Canadian companies and foreign companies in Canada

Cost effective way for CDS participants to access foreign markets

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International Strategy

Sponsor individual participant accounts with the central depository in the target market

Establish a bilateral depository-to-depository link Will pursue an unilateral link, provided that it will be

of sufficient value to participants

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Canada - U.S. Links/Services

New York Link DTC Direct Link CDS-DTC Cross-Border Movement Service U.S. Deposit/Withdrawal Service

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New York Link

Established in 1985 CDS sponsors participant membership with NSCC and

DTC (participant has their own accounts at NSCC/DTC) Allows CDS participants to interact directly with

NSCC/DTC participants CDS participants have access to all of the

products/services offered by NSCC, DTC and OMGEO that are available to U.S. participant

CDS sponsored participants are subject to same risk controls as U.S. participants

CDS act as guarantor backed by auditing of sponsored participants

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DTC Direct Link

Established in 1995 CDS sponsors participant membership with DTC

(participant has their own account at DTC) Allows CDS participants to interact directly with DTC

participants CDS participants have access to all of the

products/services offered by DTC and OMGEO that are available to U.S. participants

CDS sponsored participants are subject to same risk controls as U.S. participants with CDS as guarantor

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CDS-DTC Cross-Border Movement Service

Facilitates deliveries of security positions to or from accounts at DTC and CDS (U.S. and Canadian securities)

Uses CDS’s omnibus account at DTC Securities eligible in CDS’s and DTC’s systems Delivery instructions are exchanged using SWIFT-

like messages over a dedicated network Used for inventory movements and to facilitate the

settlement of trades Service available to all CDS and DTC participants

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U.S. Deposit/Withdrawal Services

Adopted in 1997 (CDS-West Canada merger) Uses CDS’s omnibus account at DTC Allows CDS participants to deposit/withdraw U.S.

securities directly to/from their CDS ledger CDS coordinates the deposit/withdrawal processes

on behalf of CDS participants with DTC and U.S. transfer agents

Service available to all CDS participants

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DTC CAD Settlement Service

Implemented in 2005 DTC service Utilizes DTC’s omnibus account at CDS CDS’s system used to facilitate settlement activities Allows settlement to occur between CDS and DTC

participants against CAD Specific Canadian securities eligible for service

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JASDEC Link

Implemented in 1985 (JSCC) Unilateral link - JASDEC has an omnibus account at

CDS Facilitates deliveries of security positions between

CDS and JASDEC Delivery instructions/information exchanged using

ISO15022 compliant SWIFT messages

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Euroclear France Link

Implemented in 1988 (SICOVAM) Unilateral link - CDS has an omnibus account at

Euroclear France Facilitates deliveries of security positions between

CDS and Euroclear France Delivery instructions/information sent by CDS via

ISO15022 compliant SWIFT messages but instructions/information received from Euroclear-France are not ISO15022 compliant

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SEB Link

Implemented in 2001 Unilateral link - CDS has an omnibus account at SEB

(custodian bank in Sweden) Facilitates deliveries of security positions between

CDS and SEB Delivery instructions/information exchanged using

ISO15022 compliant SWIFT messages

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Euroclear UK Direct Service

Implemented in August 2007 CDS participants become members of Euroclear UK &

Ireland under the sponsorship of CDS CDS provides Canadian participants direct access to the

Euroclear UK & Ireland GUI interface via SWIFT network Allows Canadian participants to trade and settle directly with

Euroclear UK & Ireland counterparties Limited use of SWIFT ISO 15022 messaging to be

expanded

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International Message Hub

Implemented in 2006 Manages processing of deliveries related to the

JASDEC, Euroclear France, and SEB links Little or no manual intervention required (STP) Prior to its implementation delivery

instructions/information were processed manually Can accommodate new links and bilateral links

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Possible Futures Links

Future possible links:– Markets with interlistings of Canadian companies

such as energy and resource companies– Other large investment markets of interest to

participants