(September 1 – 10:10 ET) – The Canadian Depository for Securities Limited is enabling new options for reconstituting bonds. These improvements should enhance the liquidity of the Canadian bond market, says CDS.
“The systems and procedural changes will remove limits on the reconstitution of stripped bonds beyond the quantity stripped electronically into principal and interest. This will allow CDS clients — brokers, banks, and other regulated financial institutions – to trade with certainty knowing that they can reconstitute a bond if they acquire all the related strip components,” says a CDS spokesman. “At times, this may result in the bonds being reconstituted beyondtheir original issue size.”
To avoid impacts on issuers, CDS says it will build on its existing strip bond packaging facility. As work on this initiative progresses, CDS will consult with the financial community. Implementation of the initiative is subject to regulatory approval.
CDS is encouraging the securities industry to review the possible impacts of and opportunities presented by these changes for their organizations and clients. Interested parties are encouraged to e-mail their name, e-mail address and phone or fax number to strips@cds.ca to receive regular updates on this initiative.
-IE Staff