The Canadian Securities Administrators’ Uniform Securities Transfer Act Task Force has released for public comment a revised consultative draft of a proposed provincial Uniform Securities Transfer Act.

The proposed USTA is not securities regulatory law, but is commercial property-transfer law, governing the transfer and holding of securities and interests in securities. It requires amendments to provincial legislation that governs the use of securities as loan collateral. It also replaces securities settlement rules currently contained in provincial Business Corporations Acts.

The CSA says that current Canadian law in this area needs to be modernized to deal with current securities market practices, particularly the holding and trading of securities through multiple tiers of intermediaries. “Implementation of the USTA will provide a sound legal foundation for existing practices and support the continuing evolution of market practices in the future,” it says. It notes that it is essential that Canadian legislation in this area be uniform within Canada and harmonized with existing similar legislation in the U.S.

“Securities market participants and Canadian financial services industries as a whole urgently need uniform legislation like the USTA to improve the efficiency and legal soundness of the Canadian securities settlement system,” said Stephen Sibold, chair of the CSA and of the Alberta Securities Commission. “The Canadian securities settlement system handles an enormous quantity and value of transactions on a daily basis. Issuers, investors and financial institutions rely heavily on this system. It is vital to the continued growth and evolution of the Canadian capital markets — and to their competitiveness with international markets — that the system be supported by a modern legal foundation that produces predictable results, especially in situations involving cross-border transactions.”

Comments are due by July 30.