CDS Clearing and Depostitory Services Inc. is seeking comments on proposed amendments to its rules that would allow it to establish a link to the central securities depository for the United Kingdon.

The firm explains that its strategy is to become a gateway between Canada’s capital markets and foreign capital markets, “in order to enhance the efficiency and cost-effectiveness of the clearing and settling of eligible securities for market participants”.

“CDS plans to achieve this by establishing additional links with depositories in foreign markets that provide control, ease of access and market efficiency at competitive rates for CDS’s participants transacting in those markets and for foreign market participants seeking to access Canada’s capital markets,” it says.

“The next link that CDS plans to develop is a link with CRESTCo Ltd., which is the central securities depository for the UK market and for Irish equities. CRESTCo is part of the Euroclear group, the world’s largest settlement system for domestic and international securities transactions, covering bonds, equities and investment funds.

CDS says that the CREST Link Service will give Canadian participants direct access to settlement of securities transactions through the settlement system operated by CRESTCo. Currently, many participants use CREST indirectly by appointing a UK agent. “The new service gives direct control to the Canadian office, without the delay and cost of using an agent. Instructions are input directly by the Canadian participant, and the participant can use CREST throughout its operating hours, without having to allow time to transmit instructions to its agent, who must then re-input the data into CREST,” it says.

CDS will become a CREST gateway, providing Canadian participants with direct access to CREST via the SWIFT network, and it will become a sponsoring member of CREST. Various rule changes will be required to facilitate this move.

“A link to CREST provides the Canadian investment community with a more efficient and lower cost access to the capital markets of the UK and Ireland,” it says, adding that the CREST Link is also in alignment with the joint EU-Canada strategy to facilitate bilateral trade in financial services.

Comments on the proposed amendments are due by Jan. 8, 2007.