The Toronto Stock Exchange (TSX) is adopting reforms designed to streamline the dividend reporting process — but it has dropped a plan to expand the dividend notice requirements from five to 10 days, citing industry pushback.
The Ontario Securities Commission (OSC) approved proposed changes to the TSX’s listing rules that were issued for public comment in August. Their goal was to eliminate duplication, cut administrative costs and reduce the potential for dividend declaration and reporting errors.
However, according to a notice detailing the changes, the exchange faced opposition to the idea of expanding the dividend notification period as part of these reforms. It reported that several commenters cited various reasons for opposing the change, including the risk of creating operational challenges, particularly for ETFs.
For instance, critics said that expanding the notice period would make it more difficult to accurately estimate income for distribution, “increasing the risk of inaccurate distribution payments, especially for complex products like money market ETFs and increasing the risk of unnecessary return of capital, or deferred income,” it noted.
Additionally, there were concerns that this could result in investors and brokers receiving preliminary information that would later have to be corrected, “potentially causing confusion or misaligned expectations.”
As a result of the objections, the TSX dropped the proposal, and kept the notification period at five days.
However, it shrugged off other concerns about the proposals, including worries that consolidating dividend reporting under one roof could restrict competition.
In its response, the TSX maintained that, “the amendments are strictly operational, aimed at increasing efficiency and reducing administrative burden for all issuers. They do not contravene conflicts of interest safeguards, they are not designed to restrict competition and they will not result in anti-competitive effects.”
The TSX continued, “The fundamental objective is to consolidate the data already required to be submitted to various entities (TSX, CDS and, for some, TSX Trust) into a single filing, thereby establishing one comprehensive source of issuer dividend information and mitigating data errors.”
Having been approved by the OSC, the changes take effect on Jan. 31.