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Corporate Restructuring of CDS

Corporate Restructuring of CDS. Mark Weseluck – Executive Director, Customer Service and Product Development. ACSDA General Assembly – Panama City February 22, 2008. Current shareholders. 6 Banks. TSX. IDA. CDS INC. SEDAR. SEDI. NRD. Information dissemination. Previous CDS Structure.

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Corporate Restructuring of CDS

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  1. Corporate Restructuring of CDS Mark Weseluck – Executive Director, Customer Service and Product Development ACSDA General Assembly – Panama City February 22, 2008

  2. Current shareholders 6 Banks TSX IDA CDS INC. SEDAR SEDI NRD Information dissemination Previous CDS Structure The Canadian Depository for Securities Limited Securities clearing and depository services

  3. Current shareholders 6 Banks TSX IDA New CDS Structure as of November 1, 2006 The Canadian Depository for Securities Limited Holding company CDS INC. CDS Clearing and Depository Services Inc. CDS Innovations Inc. Securities clearing and depository services Information dissemination SEDAR SEDI NRD

  4. Corporate Restructuring • Why restructure? • Segregate regulated and unregulated services for simplification of regulatory and financial reporting • Mitigate risk spillover between different lines of business • Provide the organization with the flexibility to establish new services within current or future subsidiaries

  5. Corporate Restructuring Impacts • Corporate restructuring had various internal and external impacts: • Regulatory oversight • Corporate governance • Legal considerations • Financial issues • Staff considerations

  6. Regulatory Oversight • Regulators advocated clearer separation of core and non-core services to reduce risk spillover • Proposed new structure required approval/non-disapproval from CDS’s three regulators • Formal oversight arrangements in place for regulation of core services • Revised governance structure required as part of restructuring

  7. Corporate Governance

  8. Legal Considerations • Most extensive role in implementing corporate restructuring: • Analysed possible legal structures • Co-ordinated and effected regulatory, governance, legal and documentation issues • Reviewed and assigned contracts to reflect new companies • Re-applied for CDS as member in other depositories

  9. Financial Issues • Cost allocation of shared corporate services among subsidiary companies (direct and indirect costs) • Distribution of surpluses • Cross charging of support between sister companies • Tax considerations

  10. Staff Considerations • All staff employed by CDS Limited • Assigned to subsidiary companies as applicable • Corporate services provided to subsidiaries through service level agreements • Greater planning and co-ordination required for use of shared services • Opportunities for developing/advancing staff

  11. Lessons Learned • Start as early as possible • Have a dedicated team and manage as a project • Keep regulators informed throughout the process • Keep staff informed about the impact and progress of the project • Don’t underestimate the effort required to advise external parties and effect the legal changes

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