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CDS CLEARING AND DEPOSITORY SERVICES INC. (CDS^®)

TECHNICAL AMENDMENTS TO CDS PROCEDURES

CCP FAILS TO RECEIVE

NOTICE OF EFFECTIVE DATE

A. DESCRIPTION OF THE RULE AMENDMENT

Background

On April 13, 2007, CDS published a Notice and Request for Comments in respect of proposed amendments to CDS Participant Rules relating to Failures-to-Receive in the CCP Services. A "fail-to-receive" occurs when the delivering participant has the required securities available for delivery but the receiving participant is unable to settle on value date [because the participant has insufficient funds, line of credit or aggregated collateral value ("ACV")]. In a trade-for-trade situation, the delivering participant can make an interest claim against the receiving participant for compensation for the loss of the use of funds. In the CCP services, there is no direct relationship between the delivering participant and the receiving participant so a direct interest claim by the delivering participant cannot be made against the receiving participant. The proposed Rule amendments permitted an automatic interest claim to be made for a CCP "fail-to-receive".

The CDSX® system will automatically identify each CCP "fail-to-receive" and will calculate the applicable fail mark. A fail mark is an amount that is collected by CDS from the fail-to-receive participant and distributed to the corresponding delivering participant.

The Procedures marked for the amendments may be accessed at the CDS website at:

http://www.cds.ca/cdsclearinghome.nsf/Pages/-EN-UserDocumentation?Open

[en francais: http://www.cds.ca/cdsclearinghome.nsf/Pages/-FR-Documentation?Open]

Description of Proposed Amendments

The proposed amendments add a description of the new process to Chapter 10 to the CDS Trade and Settlement Procedures User Guide, outline the calculation used to ascertain the fail mark in the CDS User Guide entitled Participating in CDS Services, and add the "Fails-to-Receive Mark Details Report" to the CDS User Guide entitled CDS Reporting Procedures.

The proposed amendments to CDS Procedures provide participants with the procedures and process consequential to the proposed Rule Amendments. In particular, the proposed amendments will detail the formula for calculating the fail mark assessed to Participants. This fail mark will reflect the cost of funds with reference to published interest rates used in the industry. In addition the proposed amendments will detail the circumstances in which participants will be charged a fee for a failure-to-receive.

B. REASONS FOR TECHNICAL CLASSIFICATION

The amendments proposed pursuant to this Notice are considered technical amendments; they are consequential amendments intended to implement a material rule that has been published for comment pursuant to CDS's Rule Protocol.

C. EFFECTIVE DATE OF THE RULE

Pursuant to Appendix A ("Rule Protocol Regarding The Review And Approval Of CDS Rules By The OSC") of the OSC Recognition and Designation Order, as amended 1 November, 2006, and Annexe A ("Protocole d'examen et d'approbation des Règles de Services de Dépôt et de Compensation CDS Inc. par l'Autorité des marchés financiers") of AMF Decision 2006-PDG-0180, made effective on 1 November, 2006, CDS has determined that these amendments will be effective on November 5, 2007.

D. QUESTIONS

Questions regarding this notice may be directed to:

Tony Hoffmann

Legal Counsel

The Canadian Depository for Securities Limited

85 Richmond Street West,

Toronto, Ontario, M5H 2C9

Telephone: 416-365-3768 ; Fax: 416-365-1984

e-mail: attention@cds.ca