The Canadian Capital Markets Association today released an addendum to its April 2002 retail trade processing white paper, recommending changes to facilitate the seamless electronic processing of retail investment products.

CCMA says automating the flow of data and payments and reducing the paper that supports retail transactions, including investment funds, is critical to providing an efficient straight-through processing (STP) environment for the Canadian retail securities marketplace.

The addendum’s key recommendations include automating the processing of client name accounts through the use of Documentation Agreements and electronic trades, increasing the use of the FundSERV Net $ettlement Messaging service to transfer funds to settle investment fund transactions, and initiating transaction orders and rejects electronically on order date.

The CCMA says these recommendations will streamline the processing and settlement of investment fund transactions among industry participants. It notes that an estimated 25% to 40% of Canadian investment fund accounts are held in client name, which impedes STP.

“Documentation Agreements will allow the participant initiating an investment fund transaction for a client name investor to retain the supporting documentation for transactions that are considered low risk. This should eliminate 50%– 75% of the paper that fund companies currently receive,” says Jerry Beniuk, chair of the CCMA Retail Trade Processing Working Group. “These agreements will also allow participants to complete approximately 70%– 80% of client name transactions electronically as opposed to manually.”

CCMA members are working towards implementing STP across Canada’s capital markets by June 2005, which will improve the competitiveness of Canadian capital markets by removing manual and redundant steps in the end-to-end securities processing chain.

A detailed review of best practices and standards to support STP processing of debt and equity transactions in the retail environment will follow after the release of final institutional and entitlements best practices and standards later this fall.

The CCMA asks investment fund manufacturers, brokers, other distributors and other retail securities participants to comment on the recommendations proposed and confirm their support to develop the concepts presented into systems, procedures and Canadian retail trade processing best practices and standards. The CCMA requests feedback by October 31.