TORONTO, Aug. 8 /CNW/ - Thomas Murray, the specialist custody rating,
risk management and research firm, recently announced the issue of an AA
Public Depository Rating to CDS Clearing and Depository Services Inc. (CDS),
which places CDS among the top-rated organizations in the world currently
assessed by Thomas Murray.
Thomas Murray's AA rating recognizes the very strong procedures and
controls applied within CDS to minimize risk for market participants. The
outlook for this rating has been assigned as stable, which suggests that there
are no imminent developments that may change the rating at this stage.
Simon Thomas, CEO and chief ratings officer of Thomas Murray said when
announcing the rating of CDS, "Thomas Murray is pleased to have assessed CDS's
existing clearing and settlement model and its risk minimization procedures
for participants. CDS, in operating a complex and sophisticated risk model,
has put in place very strong controls and procedures in order to minimize
risk. The rating reflects the work done over the years to maintain a sound and
efficient infrastructure that meets international standards and places CDS
among the top tier depositories currently assessed."
Allan Cooper, president and CEO of CDS, said, "CDS is pleased to have
worked with Thomas Murray in order to obtain an independent view of our
existing capabilities and processes. The rating process involved a thorough
review of CDS's clearing and settlement process and the AA rating demonstrates
that CDS is in an excellent position, domestically and internationally, to
support Canada's capital markets."
Thomas Murray's report highlighted a number of strengths at CDS including:
- a well-operated computer system
- effective monitoring and management of operational risk with regular
- comprehensive, annual, external audits of operational controls
- separation of commercial activities from core businesses
- credit arrangements backed by the Bank of Canada
- extensive disaster recovery plans with real-time back up of key data
- highly developed business continuity arrangements.
Some areas of asset servicing were identified by Thomas Murray as under
performing - particularly in regards to corporate action information
collection, where "a significant degree of manual interaction" still exists.
However, Thomas Murray also recognized that current market arrangements
imposed restrictions on CDS's ability to provide more efficient services in
many of these areas. CDS views these limitations as opportunities to improve
its services and will be working with regulators and stakeholders to address
The central securities depository (CSD) rating assesses the risk
exposures for investors associated with the processes CDS has in place to
facilitate the safekeeping and the clearing and settlement of securities,
where applicable. It assesses six key risks: asset commitment risk, liquidity
risk, counterparty risk, asset servicing risk, financial risk, and operational
risk. The methodology considers the capabilities of the depository and the
quality and effectiveness of its operational infrastructure. It also assesses
the depository's willingness and ability to protect its participants or
clients from losses. As part of the rating, the scope and quality of the
depository's services is assessed. The ratings are on a consistent global
scale, using the familiar AAA to C ratings scale. Once the rating is assigned
there is an ongoing surveillance process to monitor the depository.
View the report:
About CDS Clearing and Depository Services Inc.
CDS Clearing and Depository Services Inc. is Canada's national securities
depository, clearing and settlement hub - supporting Canada's equity, fixed
income and money markets, holding over $3 trillion on deposit and handling
over 95 million securities trades annually. CDS's vision is to be the world's
standard for depository and securities information services. CDS is wholly
owned by The Canadian Depository for Securities Limited.
About Thomas Murray
Thomas Murray is a specialist custody rating, risk management and
research firm specializing in the global securities services industry. Thomas
Murray was established in 1994. The company tracks and analyses over 250
custodians globally and monitors the risk of over 100 capital market
infrastructures. The company has a strong position as a provider of public and
private ratings and risk assessments on global custodians, domestic custodian
banks and capital market infrastructures.
For further information:
For further information: Janet Comeau, Manager, Corporate
Communications, The Canadian Depository for Securities Ltd. (CDS), (416)