Settlement services - Canada

19.10.2017

Pre-matching service

The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL's pre-matching services, see Pre-matching services for external settlement instructions.

Service offeredMethod employedStart (local time)
All securities
Immediate Release Flag availableAutomated through the CDSOn receipt of instruction
Connectivity mediumInstruction format
CreationOnline and Xact Web PortalTick to enable the "Immediate Release" option.
Xact via SWIFT and Xact File TransferField :22F::STCO/CEDE/IREL

Note: In order to benefit from the early matching status available in the Canadian market and therefore avoid settlement delays, CBL recommends that customers input instructions on SD-1.

Procedures for domestic counterparties

The details for receipts and deliveries in vary according to whether the securities are eligible in the CDS.

Counterparties must arrange for securities to be received and delivered as follows:

by book-entry from the CDS:
CDS transfer to CUID code a:RBCT (for Royal Bank of Canada)
Account:080000630001
Memo line:/xxxxx b
by book-entry from the DTC to the CDS (Northbound Flips) - against payment:
Deliver to:DTC 00000901
In favour of:298301/xxxxx b,c
by book-entry from the DTC to the CDS (Northbound Flips) - free of payment:
Deliver to:DTC 00005099
Using CUID code:RBCT (for Royal Bank of Canada)
In favour of:080000630001/xxxxx b
by book-entry from the CDS to the DTC (Southbound Flips) - against payment:
Receive from:DTC 00000901
By order of:298301/xxxxx b,c
by book-entry from the CDS to the DTC (Southbound Flips) - free of payment:
Receive from:DTC 00006000
Using CUID code:RBCT (for Royal Bank of Canada)
By order of:080000630001/xxxxx b
by physical deposit to RBC Investor & Treasury Services (see “Address for physical deliveries"):
The delivering party must specify that the securities are in favour of CBL account 080000630001/xxxxx b.

a. CUID = CDS participant number.
b. xxxxx = customer’s 5-digit CBL account number.
c. 298301 = Royal Bank of Canada’s account at DTC 00000901.

Allowed countervalue difference

A maximum difference in countervalue of CAD 50 is allowed in transactions with domestic counterparties in the CDS. A maximum difference in countervalue of USD 25 is allowed in transactions with domestic counterparties in the DTC.

The amount indicated by the CBL customer will always prevail. This means that, in the event of a discrepancy within the tolerance, the cash amount credited or debited to the CBL customer will be the one indicated by the CBL customer.

Specific settlement rules / settlement restrictions

CBL offers settlement, free of and against payment in USD, between Canadian and U.S. counterparties for securities that are eligible in both CDS and DTC, as follows:

  • Settlement free of payment is facilitated through the CDS’s account at the DTC;
  • Settlement against payment in USD is facilitated through RBC’s agent, Bank of New York Mellon (DTC 0000901), at the DTC.

In the settlement of cross-border transactions, Northbound Flips are deliveries of securities to Canada and Southbound Flips are deliveries to the U.S.A.

CDS nominal limitation on settlement instructions

The maximum nominal quantity for a debt transaction against payment is 50,000,000 nominal.

RegS/144A CDS-eligible securities

RegS/144A CDS-eligible securities are eligible for settlement in CBL. On an exceptional basis, the beneficial owner may be requested, by the CDS and/or the issuer, to provide additional documentation for a transfer. This may result in additional out of pocket expenses for CBL customers and settlement delays.

Back-to-back processing

Back-to-back processing is available for transactions in all book-entry securities eligible in the Canadian and U.S. domestic markets. Customers can increase same-day turnaround of instructions by “linking” one domestic receipt to one domestic delivery sale with the same value date.

Note: The linking of transactions does not guarantee settlement. CBL will bear no responsibility with regard to the failure of a linked transaction. By sending a back-to-back instruction in the Canadian market, the customer is deemed to indemnify CBL from any costs, penalties or loss that may be incurred with regard to such instruction.

The service will be performed on a one-to-one basis, provisioning one domestic sale directly with securities from one domestic purchase. Same-day settlement of both instructions will be achieved provided that both the CBL customer and the domestic counterparty meet their settlement obligations and fulfil the market back-to-back requirements within the relevant deadlines.

Note: The deadlines for the receipt of valid instructions are the same as the standard deadlines.

To benefit from this functionality, customers must ensure that their back-to-back transactions are formatted as follows, according to the connectivity medium used:

Connectivity mediumPool ID formatField(s) to be used
CreationOnline16x a
and
Turnaround
Pool Reference

Type of Settlement Transaction
Xact via SWIFT and Xact File Transfer:POOL//16x a
and
:SETR//TURN
Field :20C: sequence A1

Field :22F: sequence E

a. The reference (16x) must neither start nor end with a single slash ’/’ nor must it contain two consecutive slashes ’//’.

Note: The narrative field must be left blank.

Management of failed instructions

Deliveries and receipts with counterparties in CDS

Receipt and delivery instructions remain in suspense until they settle or until they are cancelled. CBL reserves the right to cancel an instruction with a domestic counterparty that has not settled by the 10th domestic business day after the day on which the instruction was released to the depository for settlement.

Deliveries from DTC (Northbound Flips)

Receipt instructions remain in suspense until they settle or until they are cancelled. CBL reserves the right to cancel an instruction with a domestic counterparty that has not settled by the 10th domestic business day after the day on which the instruction was released to the depository for settlement.

Deliveries to DTC (Southbound Flips)

Delivery instructions remain in suspense until they settle or until they are cancelled. If an instruction settles but is then returned (DK) by the counterparty, CBL will reverse the transaction in the customer’s account. The customer that wants to settle such a delivery must therefore re-instruct it.

Treasury shares and Electronic Treasury Orders

Treasury shares are shares that are bought back by the issuing company, reducing the amount of outstanding shares on the market. When shares are repurchased, they may be either cancelled or re-issued. When they are not cancelled, they are referred to as treasury shares.

Treasury shares entail no voting rights and pay no dividends while they remain with the issuer. Once delivered to a buyer, they become fully paid as "normal" shares.

Electronic Treasury Order (ETO) instructions

An Electronic Treasury Order (ETO) is the means whereby treasury shares are purchased directly from the issuer. Customers who want to receive treasury shares in their CBL account following an ETO must communicate "Electronic Treasury Order" in the narrative field of their receipt instruction.

CBL will block the securities in the customer account until the registration is completed.

There are two types of ETO:

  • ETO regular deposit and withdrawal; and
  • ETO instant deposit and withdrawal (processed slightly more quickly than an ETO regular deposit).

The customer must instruct CBL within the following deadlines and include information in the narrative field of their settlement instruction (field :70E:: in SWIFT, field "Settlement Processing Narrative" in CreationOnline) as indicated:

Type of depositNarrativeDeadline
ETO regular deposit or withdrawalETO regular deposit or ETO regular return including complete registration details18:00 CET
ETO instant deposit or withdrawalETO instant deposit or ETO instant return including complete registration details15:00 CET

Note: In the Canadian market, a withdrawal of securities is typically referred to as a “return”.

If only "ETO" is entered, the regular instruction option will apply by default.

There is no set process in place regarding the agent fees and fees may vary depending on the agent. The fees charged to CBL will be passed on to the customer.

Direct Registration System (DRS)

DRS is an electronic system for registering shares with a corporation's transfer agent (TA). Once registered, these shares are in book-entry form and can be subsequently transferred electronically to and from a broker/bank account.

DRS provides a statement of share holding details (DRS statement form) to shareholders at the time of issuance without having to issue individual certificates.

A DRS statement itself is of no value; it cannot be presented for settlement in a sale but, upon receipt of a DRS statement, the position can be sent for deposit to DTC or CDS for eligible securities (not restricted) provided that the TA confirms the holding and credits the shares.

A DRS statement can also be sent to request the issuance of a share certificate by the TA. (TAs may not allow the issuance of physical certificates.)

Note: In the event of loss, a new DRS statement can be requested.

Withdrawal of DRS-eligible securities from CBL

For DRS-eligible securities, withdrawal requests will be processed into DRS statement form and mailed directly to CDS by the registered holder via Canada Post. If the delivery statement is not received, customers are required to contact the TA.

Deposit of DRS-eligible securities

To have their position in DRS-eligible securities deposited at DTC or CDS, customers can do either of the following:

  • Have the TA exchange their DRS statement into a physical certificate and then deliver this to CBL's depository; or
  • Send their respective DRS statement (front and reverse side of the statement) directly to CBL's depository.

In either case, a completed Stock Power (power of attorney) plus any supporting documentation, with the usual signature guarantees as for depositing physical securities, are required (see "Procedure for depositing physical securities eligible in RBC Investor & Treasury Services" below).

When having the position deposited to DTC or CDS, customers must use the same format as for any other physical certificates with the addition of "DRS Statement registered "holder name" and statement number" in the narrative field of their instructions.

Impact on corporate actions and income collection

CBL is not responsible for corporate actions and income payments when the DRS statement is registered in the name of the benefical owner.

Procedure for depositing physical securities eligible in RBC Investor & Treasury Services

The procedure for depositing Canadian physical registered certificates that are eligible in RBC Investor & Treasury Services Toronto is as follows.

Important notes:

This procedure requires that the signatures on the transfer documentation are checked by CBL before being sent with the physical securities to RBC Investor & Treasury Services.

Securities with a U.S. 1933 legend indicated on the physical certificate are not eligible in Clearstream and will be rejected by RBC Investor & Treasury Services. Securities resulting from a corporate action event processed by Clearstream and bearing a U.S .1933 legend must be deposited with Citibank U.S. as depository.

The documents that must be submitted to RBC Investor & Treasury Services include the following:

  • The certificates (the physical securities);
  • The Power of Attorney (also called Transfer Form or Stock Power) for corporate entities and private persons;
  • The Corporate Resolution for corporate entities;
  • Any additional documentation that may be required in specific cases by the Transfer Agent.

Various forms are provided, some with notes on completion, in the zip file attached at the foot of this page.

1. Customer prepares documentation

When the customer is not the registered owner, a Power of Attorney (see attachment) must be completed and signed by the registered owner(s) (or, in the case of a corporation, by the corporation's authorised signatories) and stamped and signed by the customer. The customer must also indicate on the Power of Attorney the name of the security, the ISIN code and the nominal amount.

Customers are responsible for guaranteeing the signatory of the registered owner and, by signing and stamping the Power of Attorney, customers are deemed to have performed a check on the signature(s) and the proper power and authority of the registered owner(s).

Customers must use the separate forms and not the reverse side of original physical certificates. New original forms are required for each certificate to be transferred or deposited to CDS.

N.B.: The required documentation submitted by the customer must be completed correctly. Failure in this regard may result in the position being reversed in the customer account.

2. Customer sends Power of Attorney to CBL for authentication

The customer must send the original Power of Attorney only, duly completed and signed, by registered mail to CBL at the following address:

Clearstream Banking AG
Settlement Global
OAA / EA.08.301
60485 Frankfurt am Main
Germany

CBL will:

  • Check the authorised signature(s) of the customer;
  • Stamp and sign the Power of Attorney; and
  • Post the Power of Attorney back to the customer by mail.

N.B.: The physical certificates must not be sent to Clearstream Banking.

3. Customer processes the authenticated forms returned from CBL and delivers them to RBC Investor & Treasury Services

When the customer receives the documents back from CBL, the customer must do the following:

  • Send an appropriate free of payment receipt instruction to CBL (see the relevant instruction specifications).
  • Send to RBC Investor & Treasury Services at the following address:
    Securities Cage
    Attn: Mr Inway, Free Movement Desk
    155 Wellington Street West, 2nd Floor
    Toronto, ON Canada M5V 3L3
    the following documents, via a secure courier service:
    • The physical certificate(s);
    • The Power of Attorney;
    • The Corporate Resolution (see attachment), when applicable; and
    • A covering letter, including CBL’s account number at RBC Investor& Treasury Services (080000630001), the CBL customer’s 5-digit account number a contact name and full address details to enable RBC Investor Services to return the securities if the documentation or certificates are not in good order;

N.B.: The physical certificates must be sent separately from the other documents.

4. RBC Investor & Treasury Services processes the received physical certificates and documentation

RBC Investor & Treasury Services will:

  • Check for good delivery of the physical certificate(s);
  • Advise CBL of the receipt of such certificate(s);
  • Determine whether the certificate is eligible for deposit to CDS or eligible for re-registration by the TA1;
  • Send out the physical certificates to CDS or to the TA and credit CBL’s account.

CBL blocks the position in its customer account during the registration period and reports it as unavailable in its Statement of Holdings.

As soon as RBC Investor & Treasury Services advises CBL that the registration or deposit into CDS is completed, CBL unblocks the corresponding position in its customer’s account and makes the position available.

N.B.: The re-registration process usually takes up to one week. In special cases, the process can take longer depending on the TA’s additional requirements.

Impact on corporate actions and income collection

CBL will not be responsible for corporate actions and income payments with respect to physical certificates that have not been re-registered and returned by the TA to the depository (RBC Investor & Treasury Services).

Entitlements will pass to CBL’s depository if the certificates are re-registered not later than the record date of a corporate action or an income collection event. Corporate actions and income events will be processed on an “as-received basis”.

“Business as usual” processes apply as soon as the re-registered securities have been credited to the CBL customer’s account.

Special Settlement Procedure for Telus Corporation

Telus Corporation is a constrained share issuer that is subject to a limitation of 33.33% on the non-Canadian2 ownership of its common shares. To be deposited into CDS, common shares held by non-Canadians must be kept segregated from the regular common shares held by Canadians.

To meet the above requirements, a segregated ISIN (ISIN CA87971M9969 - Telus Corporation Non Canadian Common Shares) has been set up both in the Computershare system and in CDS.

Trade settlement involving a non-Canadian customer, as either buyer or seller, must be processed under the regular Canadian common share ISIN CA87971M1032 in the domestic market via CDS.

Non-Canadian customers buying Telus Common Shares must provide a copy of a Reservation From (see attachment), which can be obtained, either directly or through the trading broker, from Computershare. In addition, they must complete a declaration form (see attachment). A copy of both documents must be emailed to CBL Customer Service together with the receipt instruction recording the reservation number in the Settlement Processing Narrative.

Non-Canadian customers selling Telus Common Shares must complete the declaration form required for share withdrawal. On this form, the customer must place a tick in “CDS Settlement Declaration” box. The Declaration must be emailed to CBL Customer Service.

Upon settlement of the trade, the shares are to be changed from ISIN CA87971M1032 to ISIN CA87981M9969 by RBC Investor & Treasury Services in order to reflect the holding of a non-Canadian investor at CDS level.

New issues settlement

For details of the distribution procedure for new issues of Canadian government bonds, customers should contact Clearstream Banking Customer Service or their Relationship Officer.

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1. All certificates that are not depository-eligible are re-registered into RBC’s nominee name, ROYTOR & Co.
2. "Non-Canadian" refers to any registered holder without an address in Canada.