Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	The Board of Directors is answerable to the shareholders of CDS, who comprise the majority of the participants. The Board is comprised of nine representatives of shareholders/participants, one representative of a stock exchange, three independent directors and the President/Chief Executive Officer.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	As indicated above, no single organization or sector has a large voting position on the Board of CDS.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	CDS has generally pursued a policy of cost-based pricing with no conscious strategy of cross-subsidisation of services. From time to time, prices on some services have been priced in such a way so as to provide incentives for desired or disincentives for undesirable behaviour, e.g., pricing withdrawal charges for physical certificates at higher than cost. There may be some cross-subsidization during the start-up of new services.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	CDS uses the following mechanisms to ensure that stakeholder needs are met: Board of Directors, Executive Committee, Audit Committee and Finance Committee meetings - Material is circulated for the meetings in advance to allow informed discussion; members can request that items be added to meeting agendas; regulators are periodically invited as stakeholders who are not owners or users of CDS Permanent committees - These review CDS rule changes, procedural changes and other issues of a standing nature Ad hoc task forces - These are set up for projects or other specific purposes and include experienced representatives from a range of participants Focus Groups - community meetings are held to discuss new proposals and existing service enhancements Account managers - each participant has an account manager who can ensure that their needs are met on a routine basis and who meet on a no less frequently than quarterly basis with their customers Help Desk - staff are available to address customer service, technology and other problems, answering questions via phone, fax, e-mail or Website and escalating the issues as appropriate until resolution Deliverables - the Board establishes a set of deliverables annually Service Level Agreement - a service level agreement setting out standards that CDS will meet in terms of service to participants is being reviewed by the Board before publication Customer Service Survey - participants are surveyed every two years on multiple areas; the survey results and action plan to address improvements are circulated to all stakeholders Claims review process - participants can seek financial redress for errors.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	CDS' philosophy on communication is timely, open communications with stakeholders, including owners, participants, regulators and employees. Communications are made in both of Canada's official languages - French and English. Communications media include: Corporate publications, such as Annual Reports, an annual Report on Internal Controls and Safeguards, and biennial CDS Profile Daily bulletins to CDS participants and others Quarterly newsletters Periodic news releases, newsflashes, letters, training sessions and other ad hoc mechanisms Regularly updated and expanding collection of brochures in hardcopy and increasingly on the www.cds.ca Web site Refer also the answer to Question 4 above for additional communications mechanisms.