The Canadian Securities Administrators’ Uniform Securities Transfer Act Task Force is publishing for comment a consultative draft of the Uniform Securities Transfer Act.

The proposed provincial act will provide a legal foundation for the transfer and holding of securities in the modern securities market place. In addition, it will provide uniform legislation for Canada that is harmonized with existing similar legislation in the U.S.

The proposed USTA is not regulatory law; it is commercial property-transfer law, governing the transfer and holding of securities and interests in securities. The USTA requires conforming amendments to the common-law provincial Personal Property Security Acts that govern the use of securities as loan collateral, commonly referred to as pledges. It also removes securities settlement rules currently contained in provincial business corporations acts.

The CSA says that current Canadian law in this area is out of date.

“It fails to deal adequately with modern 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 is essential that Canadian legislation in this area be uniform within Canada and harmonized with existing similar legislation in the United States.”