The association spearheading Canada’ straight through processing initiative (STP) on Monday released a best practices document for industry review. The ultimate goal of the Canadian Capital Markets Association (CCMA) is a smooth transition from the current trade settlement period of three days to one, in line with similar initiative in the United States.

The initial release of the best practices and standards for governing interfaces between Canadian securities market participants, trade processing entitlements and securities lending is “the first key milestone,” says Thomas MacMillan, chair of the CCMA and president, CEO of CIBC Mellon. “It is vital that each securities stakeholder takes this opportunity to analyze the impact of the best practices and standards on its organization and the marketplace and provide feedback before they are finalized and implemented.”

The association plans to publish a final draft of the best practices document by December 2003. Legislative changes towards straight through processing are expected in December 2004 and industry wide adoption of STP standards are expected by June 2005.

“We are asking firms to assess the impact of best practices in their front middle and back offices, talk to parties and vendors and let us know if there are any significant impediments,” MacMillan says.

Joe Oliver of the Investment Dealers Association says his association is an enthusiastic supporter of the initiative. “We need to improve cost and improve risk,” in the process of securities trading. The initiative, he says, “is key to accomplishing these objectives.”

The document will be released Monday on the CCMA web site at 11:00 ET. Best practices and standards outline various industry roles in executing trades electronically in the shorter time frame, and include standards for communication. Processes for replacing paper certificates with electronic book entry securities ownership will follow later this summer.