OSFI believes that the straight-through processing (STP) initiative undertaken by the securities industry in Canada and the U.S., and spearheaded in Canada by the Canadian Capital Markets Association (CCMA), deserves broad industry support.

STP refers to accurate information passing seamlessly and electronically among all participants in the securities transaction process, from trade origination to final settlement. The securities industry has determined that to be successful, all manual or duplicate steps or time barriers in the transaction process must be eliminated. June 2005 is targeted by the industry for full STP implementation in Canada.

As an Observer to the CCMA Core group, OSFI is aware of and supports actions being taken by the CCMA and Canadian securities regulators to promote STP-readiness. These include the following surveys and request for comment:

• Canadian Securities Administrators’ (CSA) STP Readiness Assessment Survey of brokers, dealers and investment counsel/portfolio managers, issued in April of this year.
  (Available in English only.)
  
  
• CSA’s STP Readiness Assessment Survey of market infrastructure participants, which will include some federally regulated financial institutions (FRFIs) in their capacity as custodians, to be issued shortly.
  
  
• CCMA’s publication of draft “Canadian Securities Marketplace Best Practices and Standards: Institutional Trade Processing, Entitlements and Securities Lending” to be met in order to achieve cross-industry STP, issued in June for industry comment by August 15, 2003.
  (English - Full Document; French - Full Document)
  (English - Executive Synopsis; French - Executive Synopsis)

The CSA believes that its surveys will provide critical information about the degree of support for in-house initiatives required for STP and the relative significance of issues that need to be addressed. The CCMA believes it is important that each market participant analyzes the impact of the CCMA’s proposed Best Practices and Standards on its organization and the marketplace, and provides feedback by August 15, 2003, before they are finalised. OSFI supports these objectives. We encourage FRFIs and pension plans, in particular those that are directly affected, to respond to the requests for information that apply to them.

OSFI appreciates that many FRFIs and pension plans have been devoting significant resources to the STP initiative. We encourage all FRFIs and pension plans, in particular those directly affected, to ensure that their systems and business processes, and those of affiliates, meet industry STP objectives on time. We plan to follow the progress of readiness efforts by way of discussions with FRFIs through implementation in 2005.

For further information regarding STP, please contact your industry association; Barbara Amsden, Executive Director, CCMA, at 416-365-8704; or Joan Bentley, Director, Compliance Division, OSFI, at 416-973-0746.