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National Instrument 24-101- Institutional Trade Matching and Settlement

National Instrument 24-101- Institutional Trade Matching and Settlement. Shaun Fluker. History of rule. CSA publication for comment on April 16, 2004 Discussion Paper 24-401 on STP Proposed NI 24-101 and related Companion Policy (CP)

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National Instrument 24-101- Institutional Trade Matching and Settlement

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  1. National Instrument 24-101-Institutional Trade Matching and Settlement Shaun Fluker

  2. History of rule • CSA publication for comment on April 16, 2004 • Discussion Paper 24-401 on STP • Proposed NI 24-101 and related Companion Policy (CP) • Republication of NI 24-101 and CP for comment on March 3, 2006 • Publication of final NI 24-101 and CP on January 12, 2007

  3. Main purpose of NI 24-101 • Central element of Instrument is to ensure that market participants establish, maintain and enforce policies and procedures designed to achieve matching of institutional trades by no later than the end of the day on which the trade was executed or “T” (same-day matching).

  4. Important features of NI 24-101 • Rule requires dealers and advisers to have policies and procedures designed to achieve same-day matching • Rule also requires “trade-matching parties” to either enter into written agreement or provide to each other written statement confirming that each has established policies and procedures designed to achieve timely matching • “Trade-matching party” includes dealers, advisers, institutional investors and custodians

  5. Important features of NI 24-101 • Compliance monitored through exception reporting of dealers and advisers and quarterly reporting of recognized clearing agencies and MSUs • Registrants will be required to report root causes of failure to match on time and actions taken to correct problems. Root cause can be fault of other trade-matching party

  6. Important dates • April 1, 2007 – Effective date of 24-101 • October 1,2007 - Written agreements or statements in place by October 1, 2007 - Start of first quarter monitoring for reporting purposes • February 14, 2008 – first exception report due

  7. Gradual transition to matching on T • Noon on T+1 - April 1, 2007 to June 30, 2008 • 11:59 p.m. on T – Starting July 1, 2008

  8. Gradual transition for exception reporting • Exception reporting if fail to match within timeline in any calendar quarter at least: • Q4, 2007 - 80% of institutional trades on T+ 1 • Q1 & Q2, 2008 - 90 % of institutional trades on T + 1 • Q3 & Q4, 2008 - 70 % of institutional trades on T • Q1 & Q2, 2009 - 80 % of institutional trades on T • Q3 & Q4, 2009 - 90 % of institutional trades on T • Q1, 2010 - 95 % of institutional trades on T

  9. Check list on how to get ready • Review current systems capabilities and procedures to identify what may prevent your firm from achieving rule requirements • Develop policies and procedures to achieve targets • Identify what changes need to be made to services provided by third parties or whether third party services could assist • Develop trade matching statement or agreement

  10. Check list • Put in place monitoring processes to assess own and other trade matching partners’ adherence to best practices and timelines • Plan for no exception reporting • Make and test any systems and procedural changes needed • Negotiate and/or receive any agreements and statements from trade matching partners

  11. Questions being discussed • Documentation • Source of information for exception reporting • Monitoring trade matching partners’ compliance

  12. Process for identifying and resolving issues • Industry discussions • Discussions with regulators • Report to industry

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