On December 20, 2016, the Ontario Securities Commission (OSC) approved new fees proposed by CDS Clearing and Depository Services Inc. (CDS). These fees include the Entitlement and Corporate Action Events (E&CA) and ISIN Issuance and CDS Eligibility Services (ISIN) fees. The full Notice of Commission Approval can be accessed here.
Computershare has provided several updates on the CDS fee proposal, including the most recent, in our Fall 2016 version of InSync. The final approval contains various adjustments to the most recent proposal, as well as certain terms and conditions required by the OSC.
The adjustments made by CDS include the following:
- An initial reduction in the E&CA fees, specifically 50% in 2017 and 25% in 2018;
- Any debt instruments with E&CA event-related activities prior to the effective date of the fees, which is March 1, 2017, will not attract fees up to and including maturity;
- For instruments with a predictable payment stream, a prepayment option with a 20% discount will be offered;
- For municipal serial bonds with discrete interest and maturity payments, agency fees will not be applied. Agency fees will be levied only once per year;
- CDS will set up Systematic Withdrawal Plans (SWP) and SWITCH programs for existing ETFs at no cost, for 2017. Transactions, including those for DRIPs, will attract the published fees.
The terms and conditions required by the OSC include:
- A proposal and implementation timeline for a costing system that provides verifiable evidence of compliance with the prohibition on cross-subsidization between different CDS products and services, and between E&CA event categories;
- A development plan and implementation timeline for an E&CA processing system. Progress against it must be reported to and monitored by the CDS Board of Directors.
- Documentation provided by CDS that includes verifiable evidence of compliance with the prohibition on cross-subsidization, to be submitted to the OSC at certain prescribed times;
- CDS shall provide the OSC with an audited statement of revenue and cost of the issuer fees on the delivery date of the documentation in item (3) above;
- CDS shall offer memberships on the appropriate CDS user committee to issuer representatives;
- CDS shall assess the commercial viability of combining CDS’s ISIN issuance and CDSx eligibility systems.
CDS has indicated that the revised CDS fee schedule will be updated and posted effective March 1, 2017. Computershare strongly recommends you review the entire Notice to understand how these fees will specifically impact you.