Institutional Trade Processing Best Practices and Standards

January 18, 2007

There is strong agreement that the Canadian securities industry needs cross-industry best practices and standards governing the lifecycle of a transaction through investment managers, broker/dealers, custodians, service bureaus, transfer agents, depositories and more. Adoption of Best Practices and Standards by industry participants is key to maintaining the competitiveness of Canadian capital markets while working to reduce operational costs and risks at the same time as improving customer service. In 2003, the CCMA published putative Best Practices for Institutional Trade Processing, Entitlements and Security Lending to establish goals for operational practices in these areas. Since then, the CCMA has continued to work towards the achievement of same-day trade matching focussed particularly on Institutional Trades recognizing this to be an area of competitive weakness vis-a-vis the U.S. market. Institutional Trade Matching Best Practices have been updated to reflect current agreement among industry participants and will continue to evolve to reflect available functionality and business practices. We have organized Best Practices and Standards under the following headings:

  • General Principles – guidelines to follow when developing ITM related processes and procedures
  • Standard Data Elements – trade related information expected to be provided at each step in the trade flow process
  • Practices and Procedures – who does what when
  • Key Performance Measures – key measures and benchmarks employed in the industry

General Principles

  • Participants in the Institutional Trade Process (ITP) acknowledge the need to confirm trade details as soon as practical after trade execution and develop, maintain and implement policies and procedures based on industry best practices to ensure this happens.
  • Trade related parties, to reconcile trade details, identify trade discrepancies or disputed trades and resolve them as soon as possible after each step in the trade flow process so that processing delays associated with clearing discrepancies are minimized.
  • Trade details are recorded by trade related parties on underlying record keeping applications the same day, and as soon as practical following their receipt from other trade related parties.
  • Participants in the institutional trade process utilize the Standard Data Elements as set out in the CCMA Best Practices. The Standard Data Elements outline the minimum trade information required at each step in the trade flow process to ensure delay-free processing.
  • Communication of trade details among trade related parties should be made via electronic data transfer to minimize errors or delays associated with re-entry of trade details.
  • Participants in the institutional trade flow process provide adequate lead-time for other trade-related parties to meet their requirements to complete the trade confirmation process.

Standard Data Elements

The Institutional Trade Flow Process consists of 4 major transitions:

    • Communication of trade instructions from the buy-side to a broker/dealer (Order Initiation)
    • Communication of details of trade execution (NOE)
    • Communication of trade allocation details from the buy-side to the broker/dealer
      (Allocations to allow order entry on CDSX); Client Level and Block Level
    • Communication of trade allocation details from the buy-side to the custodian
      (Allocations and settlement instructions to allow order confirmation on CDSX); Client Level and Block Level

At each stage in the trade flow process specific trade related information is necessary to allow the trade to progress to the next stage. This minimum trade detail required at each step has been and is set out in the following file(s) Standard Data Elements

Definitions & Terms Pertaining to ITM

Institutional Trade Matching – Glossary of Terms

Notes to Users:

This reference document has been developed by the Canadian Capital Markets Association (CCMA) using resources and outside sources identified in this document.

While every effort has been made to ensure accuracy, the Glossary should not be considered the definitive source of information. To help keep the document as current as possible, please let us know if the term you need is not included in the glossary provided and we will add it to the list when it is next updated. Also, while every effort has been made to ensure the accuracy of the information provided, please advise us if you identify errors in any terms that are listed, so that corrections can be made.

ITM Glossary

of trade allocation details from the buy-side to the custodian
(Allocations and settlement instructions to allow order confirmation on CDSX); Client Level and Block Level

At each stage in the trade flow process specific trade related information is necessary to allow the trade to progress to the next stage. This minimum trade detail required at each step has been and is set out in the following file(s) Standard Data Elements

Canadian Securities Industry Glossary (Glossary & Acronyms)

March 2007
The Canadian Securities Industry Glossary is currently being updated.
Glossary

At each stage in the trade flow process specific trade related information is necessary to allow the trade to progress to the next stage. This minimum trade detail required at each step has been and is set out in the following file(s) Standard Data Elements