Fundserv Notice to Participants on New Rules for Service Providers

April 23, 2018

As a recognized clearing agency under Ontario securities laws, Fundserv Inc. must establish rules that we consider necessary or appropriate to govern the clearing agency services we offer. We must ensure that these rules:

  • Are not inconsistent with securities legislation
  • Do not permit unreasonable discrimination among participants, and
  • Do not impose a burden on competition that is not necessary or appropriate.

We must follow certain protocols for developing new or amended rules under the order from the Ontario Securities Commission (OSC) that granted us recognition as a clearing agency. Our recognition order is available at http://www.osc.gov.on.ca/en/SecuritiesLaw_ord_20120413_226_fundserv.htm.

It is necessary that Fundserv have clear and transparent written processes on how industry participants can become members of Fundserv. Our processes for onboarding new Manufacturer Members or new Distributor Members are well developed and our Customer Relations staff work closely with new Members to help them through the process, which is clearly laid out on our website and includes access to our “Getting Started Package”.

We also have processes for onboarding new Service Providers and our Customer Relations staff also work closely with these entities to help them through the process. Although we list the Service Providers that are connected to our Network on our website, we have not, to date, clearly established those processes by way of written procedures to ensure that our processes are well understood by any industry participant wishing to become a Service Provider that is connected to our Network.

We have developed draft written procedures which we propose to adopt as rules under our Recognition Order in respect of processing applications by prospective Service Providers. These written procedures follow our current processes, and we provide detail on how we will carry out our decision-making and what matters we will consider before we allow a Service Provider to access the Network, the Fundserv Standards, and the Net Settlement System. We also outline the due process that we will follow in our decision-making regarding new Service Provider applications. We consider that the level of detail in the draft written procedures is necessary given the important function that Service Providers play in the Canadian investment fund industry, and their role in allowing Members to access the Network, use the Fundserv Standards, and use the Net Settlement System. We consider that the draft written procedures meet the standards for our rules as set out in the Recognition Order (as described above).

Under the above-noted rule protocol with the OSC, we must publish our draft rules for industry comment for a period no less than four weeks and we must also submit the draft rules to the OSC for review and comment.

We invite you to review the draft written procedures which are available at Rules for Service Providers and send us any comments you may have on them by 5:00 p.m. on May 22, 2018. You may send comments to communications@fundserv.com. You may contact our Chief Relationship Officer, Genevieve Groat, at genevieve.groat@fundserv.com and (416) 350-2509 if you have any questions. You may also mail any comments to us by writing to our Chief Relationship Officer at Fundserv, 1700-130 King Street West, Toronto, Ontario, M5X 1E5.