The Canadian Securities Administrators is publishing its responses to industry comments received on a discussion paper on straight-through processing (STP) and related materials published last year.

Discussion Paper 24-401 on Straight-through Processing and Proposed National Instrument 24-101 — Post-Trade Matching and Settlement acknowledge the importance of post-execution functions, advance the industry discussions on STP and build on previous initiatives to improve the securities clearing and settlement system in the Canadian capital markets.

CSA Notice 24-301 provides an update on industry and regulatory STP developments and a summary of the comments received on the STP Release.

The CSA says it remains committed to supporting an institutional trade-matching (ITM) rule in force by Jan. 1, 2006, but intends to pursue this objective through a co-operative approach with the self-regulatory organizations that also have an interest in establishing ITM requirements.

The CSA says it hopes to have the appropriate rule or rules finalized by Dec. 31, 2005.

The comment period on the STP Release ended on July 16, 2004 and the CSA says it received 26 comment
letters.

The CSA says almost all the commenters thought the STP Release was helpful in focusing the discussion on the various clearing and settlement issues with which the industry is currently faced.

It added that many agreed with the broad objectives of the STP Release to: reduce risk in, and improve the overall efficiency of, clearing and settlement and post-settlement processes; and maintain the global competitiveness of our markets.

As for the proposed National Instrument, the CSA says the majority of comments on this issue supported a CSA ITM rule. However, almost all of these comments found it unfeasible to require institutional trade matching on T by July 1, 2005.

Rather, the consensus was for an ITM rule to provide for phasing in the requirement to match institutional trades, starting with T+1 and progressively shortening the period to T when the industry is ready.

Commenters felt that such incremental steps would provide market participants with an opportunity to address a number of concerns about an accelerated confirmation and affirmation process.