The Canadian Capital Markets Association today released an addendum to its November 5, 2001 white paper on dematerialization, aimed at replacing paper certificates with electronic holdings to facilitate straight-through-processing of securities.

CCMA says the addendum confirms that comments received on the original white paper validate its 11 recommendations aimed at encouraging issuers to issue, and registered shareholders to hold, their securities in electronic form.

Thomas MacMillan, chair of the CCMA, said, “Our dematerialization recommendations directly support the Group of Thirty’s number one recommendation of eliminating paper throughout the securities-handling process.”

The majority of comments received from industry representatives on the November 5, 2001 dematerialization white paper requested additional details on the operational mechanisms of the proposed Direct Registration System (DRS) — an electronic name-on-register alternative to paper certificates.

The white paper addendum concludes that the use of a nominee-name book-entry central securities depository continues to be the prime choice for holding securities for financial intermediaries and their clients.

Bill Brolly, chair of the Dematerialization Working Group, said: “A total book-entry environment for all Canadian securities for both directly registered securities and those held in nominee name is a win for everyone involved. The investor wins from a cost-effective form of book-entry ownership and portability without the added costs of safekeeping, delays, loss or damage or the risks of forgery or theft. The issuer wins by having a more cost-effective method of providing evidence of ownership. And intermediaries win by having a more cost-effective, timely and secure method of securities processing.”

Brolly confirmed that individuals or firms will continue to be able to elect to have a physical certificate for personal reasons or to meet a requirement not envisaged within the design of the dematerialization recommendations. He added: “Over time, if we do this right, even that need should disappear as it has in a number of countries around the globe.”