Application under section 147 of the Securities Act (Ontario) (OSA) to exempt SS&C Technologies Canada Corp. from recognition as a clearing agency under subsection 21.2(0.1) of the OSA.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 21.2(0.1), 147
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5,
AS AMENDED ("OSA")
IN THE MATTER OF
SS&C TECHNOLOGIES CANADA CORP.
AND SS&C TECHNOLOGIES HOLDINGS, INC.
(Section 147 of the OSA)
WHEREAS SS&C Technologies Canada Corp. ("SS&C Canada") and SS&C Technologies Holdings, Inc. ("SS&C Holdings") have filed a joint application dated December 15, 2010 (Application) with the Ontario Securities Commission ("Commission" or "OSC") for an order pursuant to section 147 of the OSA exempting SS&C Canada from the requirement to be recognized as a clearing agency pursuant to subsection 21.2(0.1) of the OSA;
AND WHEREAS SS&C Canada and SS&C Holdings have represented to the Commission that:
1. SS&C Canada is an indirect, wholly owned subsidiary of SS&C Holdings. SS&C Holdings, headquartered in Windsor, CT, USA, is a publicly traded company listed on the NASDAQ National Market.
2. Pursuant to National Instrument 24-101 - Institutional Trade Matching and Settlement (NI 24-101), SS&C Canada submitted in 2009 to the Commission Form 24-101F3 -- Matching Service Utility Notice of Operations. The same document was also submitted to the Autorité des marchés financiers that same year. SS&C Canada is subject to the requirements of a matching service utility ("MSU") in Part 6 of NI 24-101.
3. SS&C Canada offers Participants access to a real time MSU that facilitates the matching of allocations of institutional investor securities transactions against corresponding dealer confirmations.
4. SS&C Canada operates an electronic, post trade communications network ("SSCNet") based in Mississauga, Ontario. SSCNet traces its history in Canada to 1991 when the network was introduced under its predecessor name, FMCNet.
5. SSCNet is used by registered dealers, advisors, and custodial banks and trust companies (collectively "Participants") to communicate post trade delivery against payment, receipt against payment, and associated foreign exchange instructions between each other to facilitate the timely and accurate settlement of security transactions. Dealers and custodians use those instructions to report and affirm security transactions on behalf of advisors through the facilities of CDS Clearing and Depository Services Inc. ("CDS").
6. SS&C Canada does not perform any core clearing agency functions such as:
(a) acting as an intermediary in paying funds or delivering securities, or both, in connection with trades and other transactions in securities,
(b) providing centralized facilities for the clearing of trades and other transactions (other than centralized facilities for comparing data respecting the terms of settlement of a trade or transaction), or
(c) providing centralized facilities as a depository of securities.
7. While SS&C Canada does not perform core clearing agency functions, it recognizes the need for proper risk management and has placed into operation a risk assessment process to identify and manage risks.
8. SS&C Canada maintains business continuity plans that would take effect in the event of a catastrophe or pandemic. SS&C Canada operates a business continuity centre, an alternate data and operations facility, as part of its standard SSCNet service offering. All business continuity related systems of SS&C Canada are tested at least once per annum.
9. SS&C Canada commits to ongoing cooperation and sharing of information with the OSC and, SS&C Holdings ensures SS&C Canada's compliance with applicable regulatory requirements.
AND WHEREAS based on the Application and the representations of SS&C Canada and SS&C Holdings have made to the OSC, the Commission has determined that (i) SS&C Canada satisfies specific criteria set out in Appendix "A" of Commission Staff Notice 24-702 -- Regulatory Approach to Recognition and Exemption from Recognition of Clearing Agencies dated March 19, 2010 which are relevant to SS&C Canada's MSU activities in Ontario; and (ii) it would not be prejudicial to the public interest to grant the order requested;
IT IS HEREBY ORDERED by the Commission that, pursuant to section 147 of the OSA, SS&C Canada is exempt from the requirement to be recognized as a clearing agency under subsection 21.2(0.1) of the OSA;
PROVIDED THAT SS&C Canada and SS&C Holdings comply with the terms and conditions attached hereto as Schedule "A".
DATED at Toronto this 15th day of February 2011, effective March 1, 2011.
Terms and Conditions
Systems and Technology
1.1 For each of its systems that supports trade matching, SS&C Canada shall:
(a) develop and maintain
(i) reasonable business continuity and disaster recovery plans;
(ii) an adequate system of internal control over those systems; and
(iii) adequate information technology general controls, including without limitation, controls relating to information systems operations, information security, change management, problem management, network support and system software support;
(b) in accordance with prudent business practice, on a reasonably frequent basis and, in any event, at least annually,
(i) make reasonable current and future capacity estimates;
(ii) conduct capacity stress tests to determine the ability of those systems to process transactions in an accurate, timely and efficient manner; and
(iii) test its business continuity and disaster recovery plans; and
(c) promptly notify staff of the Ontario Securities Commission (OSC or Commission) of any material systems failure, malfunction or delay.
1.2 For each of its systems that supports trade matching, SS&C Canada shall ensure that a qualified party conduct an independent systems review and prepare a report regarding its compliance with section 1.1(a).
2. SS&C Holdings shall file its annual audited financial statements within 90 days after the end of its financial year and the annual financial statements of SS&C Canada which may be unaudited.
3. Where SS&C Canada has outsourced any of its key functions, it has appropriate and formal arrangements and processes in place that permit it to meet its obligations and that are in accordance with industry best practices. The outsourcing arrangement provides regulatory authorities with access to all data, information, and systems maintained by the third party service provider required for the purposes of regulatory oversight of the agency.
Information Sharing and Regulatory Cooperation
4.1 SS&C Canada shall provide such information as may be requested from time to time by, and otherwise cooperate with, the Commission or its staff, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
4.2 SS&C Canada shall share information and otherwise cooperate with other recognized and exempt clearing agencies as appropriate, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
5. SS&C Holdings shall take such actions as are within its ability to assist SS&C Canada in meeting the terms and conditions of this order.
6. SS&C Holdings shall provide such information as may be requested from time to time by, and otherwise cooperate with, the Commission or its staff, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
7. SS&C Canada shall not expand their business in Ontario into other clearing agency functions without the prior approval of the Commission.