Market Profiles

RBC IS operates an omnibus account structure in this market.

For further information or support around accessing this market, please contact your RBC IS representative.

TMX Group – owns and operates the following national exchanges:

Toronto Stock Exchange (TSX) – provides senior issuers with access to public equity, liquidity for existing and new investors.

TSX Venture Exchange – provides access to growth capital for early stage companies while offering investors a market for making venture investments.

Montreal Exchange (MX) – provides interest rate, index and equity derivatives trading and clearing. The MX also owns a majority interest in Boston Options Exchange (BOX).

TSX Alpha Exchange – lists and trades securities including equities, debentures, exchange-traded funds and structured products.

Canadian Depository for Securities Limited (CDS Ltd.) – provides depository, clearing, and regulatory & information services to securities market participants

TSX Trust – provides issuers with corporate trust, transfer and registrar services.

The TMX Group also operates:

Natural Gas Exchange (ICE NGX) - a North American exchange for the trading and clearing of physical natural gas, crude oil and electricity futures contracts.

Shorcan Brokers Limited - a fixed income interdealer bond dealer.

Based on market capitalization, TMX Group is ranked the third largest exchange in North America.

Other stock exchanges in Canada include:

Canadian Securities Exchange (CSE) – CSE is an alternative Canadian stock exchange for

both emerging and established companies from all business sectors. Trading is fully electronic. The CSE is located in Toronto and maintains a branch office in Vancouver.

ICE Futures US – ICE Futures US trades soft commodities, North American natural gas and power, equity indexes and FX. Trading is fully electronic.

Trading of debt instruments
Although the TSX and TSX Venture stock exchanges will accept debt securities for listing, normally only debt instruments that are convertible into a listed equity are traded. Debt trading occurs over-the counter in Canada, either by telephone network or one of the electronic bond trading systems, such as CanDeal or CBID.

(Source: TMX, TMX Group Companies)

(Source: IIROC, Market Share by Marketplace. For the four quarters ending June 30, 2023.)

Monday to Friday:

TSX

09:30 - 16:00 EST (continuous trading)

16:15 - 16:30 EST (extended session on TSX for participating organizations)

ISIN (International Securities Identification Numbering): Used exclusively by the Canadian Depository for Securities' (CDS) CDSX system. Every CDSX-eligible security requires an ISIN.

Other: CUSIP (Committee on Uniform Security Identification Procedures) is a standard system of securities identification and securities description that is used in electronically processing and recording securities transactions in North America. A CUSIP number uniquely identifies a Canadian or American security and its issuer.

Office of the Superintendent of Financial Institutions (OSFI)

OSFI is the primary regulator and supervisor of federally regulated deposit-taking institutions, insurance companies, and federally regulated pension plans. OSFI supervises and regulates all banks, including foreign bank branches and representative offices, and all federally incorporated or registered trust and loan companies, insurance companies, co-operative credit associations, fraternal benefit societies and pension plans. OSFI is actively involved in the international network of regulatory and supervisory forums such as the Financial Stability Board (FSB), Basel Committee on Banking Supervision, International Association of Insurance Supervisors, and others. OSFI has oversight on the financial soundness and security of institutions it regulates and can intervene in their management if they have concerns over security, operations or financial risks. OSFI’s legal powers are granted by Parliament through the Office of the Minister of Finance. In case of insolvency, OSFI and/or CDIC (Canada Deposit Insurance Corporation) will take over the operation of an insolvent financial institution or undertake the role of receiver.

The merger of the former Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) has been completed, and the new combined SRO, Canadian Investment Regulatory Organization (CIRO), now oversees all investment dealers, mutual fund dealers and trading activity on Canada’s debt and equity marketplaces. CIRO is committed to protection of investors, providing efficient and consistent regulation, and building Canadians’ trust in financial regulation and the people managing their investments.
Securities Commissions
Canada's ten provinces and three territories are responsible for supervising the Canadian securities industry, including stock exchanges, investment dealers, clearing agencies and investment advisors. The three objectives of Canadian securities regulation are the protection of investors, ensuring fair, efficient and transparent capital markets and the reduction of systemic risk.

The CSA has developed the "passport system" through which a market participant has access to markets in all selected passport jurisdictions by dealing only with its principal regulator and complying with one set of harmonized  rules. To date all of the securities regulators, except the Ontario Securities Commission (OSC), have approved the passport system.

If the OSC is the principal regulator, the OSC conducts a review of the application (prospectus and/or exceptions) and its decision is effective in the other jurisdictions.

If the OSC is not the principal regulator, and the market participant also desires access to the Ontario market, the market participant must file with both the principal regulator and the OSC. If the OSC has any concerns it will raise them with the principal regulator, who must resolve those concerns with the market participant prior to the OSC approving the application.

The federal government and several Canadian provinces and territories – Ontario, British Columbia, Saskatchewan, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and Yukon –signed a memorandum of understanding on a proposal to implement a cooperative capital markets system, including a common regulator, to streamline securities regulation among them. Although work on implementing the new regulator has been underway since 2017, it was significantly delayed as a result of the pandemic and the prioritization by the provincial regulators on reforms to provincial legislation and the SRO system. As such the Capital Markets Authority Implementation Organization, which was charged with creating the new regulator, paused its operations in March 2021. All of its work product is preserved for reactivation when the participating jurisdictions complete the required legislation, and establish a timeframe, to launch the cooperative system.

The 13 securities regulators are:

Alberta Securities Commission

Autorité des marches financiers

British Columbia Securities Commission

Financial and Consumer Affairs Authority of Saskatchewan

Manitoba Securities Commission

New Brunswick Financial and Consumer Services Commission

Northwest Territories Office of the Superintendent of Securities

Nova Scotia Securities Commission

Office of the Superintendent of Securities Nunavut

Ontario Securities Commission

Prince Edward Island Financial and Consumer Services Division

Office of the Superintendent of Securities Service Newfoundland and Labrador

Office of the Yukon Superintendent of Securities

Bank of Canada
The Bank of Canada is Canada's central bank. It focuses on the goals of low and stable inflation, a safe and secure currency, financial stability, and the efficient management of government funds and public debt. In addition, the Bank of Canada regulates certain designated systems, including CDSX (the CDS settlement mechanism), and it is also a short-term lender to direct clearers.

Protection of investor assets
Canada has a number of organizations that provide consumer protection in the event of a failure of a Canadian financial institution such as a bank or trust company, a credit union, an investment dealer, a mutual fund dealer or an insurance company. These organizations include:

Canada Deposit Insurance Corporation (CDIC)
CDIC is a federal Crown Corporation, created to provide deposit insurance and contribute to the stability of Canada's financial system. CDIC insures eligible deposits (up to CAD 100,000 per insured category) in member banks, federally regulated credit unions, and trust companies, loan companies or associations governed by the Cooperative Credit Associations Act, against loss in case of member failure. The role of the CDIC has been expanded by Parliament to provide for, along with the Office of the Superintendent of Financial Institutions (OSFI), assessment rights and early intervention in the event of concerns over a financial institution's stability.

Effective January 1, 2023, the former Canadian Investor Protection Fund (Former CIPF) and the MFDA Investor Protection Corporation (MFDA IPC) were amalgamated to form a new investor protection fund known as the Canadian Investor Protection Fund (CIPF). CIPF provides limited protection for property held by a member firm on behalf of an eligible client, if the member firm becomes insolvent. CIPF member firms are members of the Canadian Investment Regulatory Organization (CIRO) that are: (i) investment dealers and/or (ii) mutual fund dealers that are not located exclusively in Quebec.

Canadian Investor Protection Fund (CIPF)
Coverage has not changed under the new CIPF, and for clients of investment dealers continues to be up to CAD 1 million per eligible account belonging to customers in the event that a Canadian investment dealer becomes insolvent. In the case of clients of mutual fund dealers, coverage under the new CIPF also continues to be up to $1 million for each of a customer’s general (trading accounts) and separate (registered retirement) accounts. Coverage is limited to investment dealers and mutual fund dealers that are CIPF members. Approximately 258 financial services firms across Canada are members of CIPF.

Equities: Common shares, class shares, restricted shares, preferred shares, cumulative preferred shares, participating preferred shares, convertible preferred shares, retractable preferred shares, redeemable preferred shares, units of participation, warrants, rights, units, voting and non-voting shares

Debt: Bonds, debentures, straight bonds or debentures, convertible bonds or debentures, variable rate bonds or debentures, federal bonds, provincial and municipal bonds or debentures, government guaranteed mortgage-backed securities

Money Market: Federal and provincial treasury bills, bankers acceptances, commercial paper, certificates of deposit, guaranteed investment certificates

Other: Income trusts, exchange-traded funds, CDS Book-Entry

Strips: stripped coupons, residual bonds, interest or principal amounts. "Packages" and "units" are also available.

Equity options and financial futures are traded in Montreal.

All depository-eligible securities must be settled by book-entry. All securities that settle through the Canadian Depository for Securities' proprietary system (CDSX) are dematerialized. This includes most equity and debt securities. Other securities are immobilized at CDS. Physical securities do exist and will mostly be in registered form.

(Source: TSX, Order Types and Functionality Guide)

Government of Canada Market Debt Instruments
Fixed-Coupon Marketable Bonds                       denominations of $1,000 (face value) to $1,000,000
Treasury Bills                                                  denominations of $1,000 (face value) to $1,000,000

(Source: Government of Canada Securities Technical Guide)

The TSX trades in one cent increments, for all stocks with a trading price greater than or equal to CAD 0.50.

Circuit breakers
The Investment Industry Regulatory Organization of Canada (IIROC) maintains a circuit breaker mechanism for Canadian exchanges. Circuit-breaker points represent levels at which trading is halted because an index has fallen by a pre-determined percentage. Circuit-breakers are intended to prevent panic selling.

It is the policy of IIROC to co-ordinate trading halts with markets in the United States when circuit breakers are invoked on those markets.

Current levels
Trading halts will be triggered when the S&P 500 declines below its closing value on the previous day at the following levels:

Level 1: 7%

Level 2: 13%

Level 3: 20%

The length of the regulatory halts at each level:

Level 1:
- before 3:25 p.m. – 15 minutes
- at or after 3:25 p.m. – trading shall continue, unless there is a Level 3 halt

Level 2:
- before 3:25 p.m. – 15 minutes
- at or after 3:25 p.m. – trading shall continue, unless there is a Level 3 halt

Level 3:
- at any time, trading shall halt and not resume for the remainder of the trading day

If markets in Canada are open for trading on a day that the NYSE is not scheduled to be open, trading halts will be triggered when the S&P/TSX Composite Index declines below its closing value on the previous day at the following levels:

Level 1: 7%

Level 2:  13%

Level 3:  20%

(Source: IIROC, Guidance on Market-wide Circuit Breakers)

The US Securities Exchange Commission (SEC) announced the final deadline for the US market to move to T+1. The new date is May 28, 2024. The Canadian Capital Markets Association (CCMA) made it clear the importance for Canada to align to the SEC timeline.

CAD & USD

Physical: GICs, term deposits, some corporate debt and equities, private placements and restricted shares. Note: CDIC rules do not permit re-registration to an RBCIS Nominee name (in the role of Custodian).

Registration Process

Book-Entry: Participant ledger positions at CDS are adjusted automatically on actual settlement date.Individual client records are maintained by the sub-custodian.

Physical: Physical securities must be 'Medallion signature guaranteed' by a bank or trust company, duly endorsed and submitted to the issuer's transfer agent. The old certificate is cancelled and a replacement issued in the name of the new owner. Nominee registration is common market practice.

Registration timeframes for physical securities vary depending on the location of the transfer agent. Registration typically takes three to four days for equities and two weeks for bonds, provided the agent resides locally. Out-of-town or cross-border transfers of equities and bonds can take several weeks. Certificates can be registered in the name of the beneficial owner but are usually held in the sub-custodian's nominee name.

Registrar

Transfer Agents manage requests to cancel (physical) securities registered in a particular name and re-issue them in a new name. Transfer requests are commonly received over the counter, by mail and by courier from security holders, lawyers, brokers, investment dealers, financial institutions and issuer clients. Generally, an Irrevocable Power of Attorney Securities Transfer Form or Direct Registration System advice and Medallion Guarantee are required to establish transferability.

(Source: Securities Transfer Association of Canada)

Registration Period

Registration timeframes for physical securities vary depending on the location of the transfer agent. Registration typically takes three to four days for equities and two weeks for bonds, provided the agent resides locally. Out-of-town or cross-border transfers of equities and bonds can take several weeks. Certificates can be registered in the name of the beneficial owner but are usually held in the sub-custodian's nominee name.

For book entry registration, CDS adjusts participant ledger positions automatically on actual settlement date.

Book Entry: Most equity and debt securities settle through the Canadian Depository for Securities’ proprietary CDSX system, a real-time gross settlement platform. Trade data is routed to CDS by the exchange or the selling broker for off-exchange trades. CDSX trades are affirmed real-time intra-day via Interlink.

CDSX has several settlement processes. Custodians and banks typically settle trades via the tradefor- trade process (TFT), which settles trades on an individual basis. On a daily basis, TFT settlement starts with a Batch Net Settlement session (BNS) at 4:00 am, where eligible trades are captured and

then settled in a batch usually around 6:00 am. This is followed by:

- Real time, intraday settlement from 7:00 am to 4:00 pm with simultaneous postings to participant position ledgers and fund accounts

- Payment exchange between 4:00 pm and 5:00 pm where the netted balances in participant fund accounts are flattened out

Settlement starts again at 4:00 am (BNS) on the next day.

National Instrument 24-101 - Institutional Trade Matching and Settlement

National Instrument 24-101 was introduced to provide a legislative framework that ensures more efficient and timely processing and settlement of institutional trades. Institutional trading participants were required to establish processes and procedures that allow trade matching within prescribed limits (performance targets). These targets were phased in over several years. The current trade matching target rate is 90% by noon on T+1.

Monitoring and compliance

Part 4 of National Instrument 24-101 Institutional Trade Matching and Settlement requires market participants to report in certain circumstances using Form 24-101F1 Registrant Exception Report of DAP/RAP Trade Reporting and Matching to the applicable securities regulatory authority. The form must be delivered if less than a percentage target of the deliver against payment (DAP) or receive against payment (RAP) trades (measured by volume or value) executed by or for the registrant in any given calendar quarter have matched within the time required by the Instrument.

Maximum Split Rule

Debt trades reported to the CDS are subject to a maximum par value limit of CAD 50 million. The rule was adopted to reduce the risk of delayed or failed settlements of large value debt trades and end-of day gridlock by reducing the number of market participants that consolidate and deliver large positions late in the day.

Brokers, investment managers and clients are required to report splits to CDS and custodians in a consistent manner to ensure efficient settlement. If debt trade instructions are not appropriately split, custodians will be unable to match institutional trades which may result in delays, failed settlements and non-compliance with the market trade matching deadlines under National Instrument 24-101.

N/A

Same day turn around trades are possible in the Canadian market.

Canadian Depository for Securities (CDS)

The Canadian Depository for Securities Limited (CDS Ltd.) is a holding company with four wholly owned operating companies: CDS Clearing and Depository Services Inc., CDS Inc, CDS Innovations Inc. and CDS Securities Management Solutions Inc. CDS Clearing and Depository Services Inc. is Canada's national securities depository, clearing and settlement hub. CDS offers electronic clearing services both domestically and internationally, enabling customers to report, confirm and settle securities trade transactions/

CDS is regulated by the Ontario Securities Commission under the Ontario Securities Act in Ontario and the Autorité des marchés financiers under the Quebec Securities Act in Quebec. CDS works with the Alberta and British Columbia securities commissions as needed. CDS also reports, as required, to the Canadian Securities Administrators and co-operates with federal and provincial financial institution regulators, which oversee CDS participants. At the federal level, the Bank of Canada regulates CDSX, the CDS settlement mechanism, for clearing and settling payment obligations under the Payment Clearing and Settlement Act.

Securities that settle through CDSX are dematerialized. All depository-eligible securities must be settled by book-entry. Other securities are immobilized at CDS and jumbo certificates represent total depository holdings.

CDS supports Canada's equity, fixed income and money markets. CDS has custodial relationships with CAVALI, Depository Trust Company, Euroclear France, and Skandinaviska Enskilda Banken AB. 

CDS acts as central counterparty (CCP) for all exchange trades settling continuous net settlement (CNS) and trade-for-trade (TFT) settlement. Affirmed, non-exchange trades also continually settle on a trade-for-trade basis at CDSX directly between participant accounts subject to certain edits ensuring sufficient position, cash or credit and aggregate collateral value in the buyer's General Account.

(Source: TMX, International Services)

BIS is an international organization which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorize the links between delivery and payment in a securities settlement system.

The trade-for-trade (TFT) Canadian settlement process most closely approximates BIS Model 1. The TFT system is one in which securities and fund transfers occur on a gross basis throughout the processing cycle. The transfers are final and irrevocable. Negative fund balances in participants' accounts are fully collateralized, while positive fund balances are redeemable at any time during the processing day. Final payment obligations are settled on a net basis via the LVTS at the end of the processing cycle.

The CNS (inter-dealer) system is BIS Model 3. Securities and cash funding are settled through multilateral netting. Security transfers are made via book entry and are final; fund transfers are irreversible, but not final. Therefore, final transfer of securities precedes final transfer of funds (i.e. delivery precedes payment).

(Source: BIS - Clearing, settlement and depository issues)

Book-Entry: Participant ledger positions at CDS are adjusted automatically on actual settlement date. Individual client records are maintained by the sub-custodian.

Physical: Physical securities must be 'Medallion signature guaranteed' by a bank or trust company, duly endorsed and submitted to the issuer's transfer agent. The old certificate is cancelled and a replacement issued in the name of the new owner. Nominee registration is common market practice.

Registration timeframes for physical securities vary depending on the location of the transfer agent.

Registration typically takes three to four days for equities and two weeks for bonds, provided the agent resides locally. Out-of-town or cross-border transfers of equities and bonds can take several weeks.

Certificates can be registered in the name of the beneficial owner but are usually held in the subcustodian's nominee name.

Transfer Agents - The Securities Transfer Association of Canada issued updated guidelines in April 2020. These guidelines reflect common Canadian industry practice. Transfer Agents manage requests to cancel (physical) securities registered in a particular name and re-issue them in a new name. Transfer requests are commonly received over the counter, by mail and by courier from security holders, lawyers, brokers, investment dealers, financial institutions and issuer clients. Generally, an Irrevocable Power of Attorney Securities Transfer Form or Direct Registration System advice and Medallion Guarantee are required to establish transferability.

(Source: Securities Transfer Association of Canada)

N/A

Shareholdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organizations for this market, within the time frame required.

If you have any questions regarding this topic we encourage you to consult your legal counsel.

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

Any person or company owning securities representing more than 10% of a company's voting rights must disclose this information monthly to the appropriate provincial securities commission. Increases and decreases in 2% increments must also be reported.

National Instrument 54-101 Communication with Beneficial Owners of Securities requires that Canadian intermediaries provide to reporting issuers or third parties on request the names of beneficial owners and certain security holder information. Please note that intermediaries must receive the beneficial owners' consent, before sharing this type of information. This consent is usually sought as part of our client onboarding process.

Buy-ins are seldom utilized within the Canadian market. Historically, RBCIS and the parties involved work together to resolve the differences and settle the transaction. If a buy-in is to take place, where the counterparty has failed to deliver a security after settlement date, a buy-in letter will be issued and procedure will be instigated. Written notification can be given any time after settlement date. In most buy-in circumstances the brokers send the buy-in notification directly to the client immediately after settlement date. If a counterparty fails to deliver securities sold to the receiving party within a specified number of days after settlement date, the receiving party may buy-in the securities in the open market and charge the counterparty (delivering party) the cost of such purchase. This includes fluctuations in price and broker commissions.

Securities lending is permitted and well developed.

Canada has a number of organizations that provide consumer protection in the event of a failure of a Canadian financial institution. These organizations include:

Canada Deposit Insurance Corporation (CDIC) – for claims against CDIC-member banks, trust companies, loan companies and associations governed by the Cooperative Credit Associations Act in case of failure of such institutions. The Quebec financial markets regulator (AMF) protects the deposits of certain Quebec-authorized deposit institutions.

Effective January 1, 2023, the former Canadian Investor Protection Fund (Former CIPF) and the MFDA Investor Protection Corporation (MFDA IPC) were amalgamated to form a new investor protection fund known as the Canadian Investor Protection Fund (CIPF). CIPF provides limited protection for property held by a member firm on behalf of an eligible client, if the member firm becomes insolvent. CIPF member firms are members of the Canadian Investment Regulatory Organization (CIRO)  that are: (i) investment dealers and/or (ii) mutual fund dealers that are not located exclusively in Quebec.

Canada is a full member of the Financial Action Task Force on Money Laundering and has ratified the UN Convention Against Illicit Traffic in Narcotics Drugs and Psychotropic Substances of 1988. The applicable Canadian laws and regulations are the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, the Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations, etc.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit (FIU). The Centre assists in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC has issued guidance to help individuals and entities understand their obligations under the PCMLTFA and its associated Regulations, though this guidance is not to be considered legal advice. FINTRAC monitors and assesses compliance of reporting entities with the legislation and regulations and receives financial transaction reports that are required to be filed by those entities.

There are no market restrictions for foreign investors.

The federal government restricts non-Canadian investment in regulated industries, considered “critical” to the national infrastructure, such as banking, broadcasting, communications, insurance, public utilities, transportation and trust services. Foreign ownership restrictions vary as each sector is governed by separate acts (e.g., the Bank Act, the Insurance Companies Act). The issuing agent is responsible for tracking constrained issues to ensure the limits are not exceeded.

Foreign ownership in these industries varies, but is generally limited by legislation to between 10 percent and 30 percent of the total voting shares. For example: 

Banking: The acquisition by a person of a significant interest (generally beneficial ownership of 10 percent or more of any class of shares) in a bank requires ministerial approval, regardless of the size of the bank. Single investors (domestic or foreign) in large banks (those with equity in excess of CAD 12bn) can hold no more than 20 percent beneficial ownership of any class of voting shares and up to 30 percent of any class of non-voting shares, subject to a “fit and proper” test and approval from the office of the Minister of Finance. Large banks must be widely held. A person may control a medium bank, with equity between CAD 2-12bn, up to 65 percent provided at least 35 percent of the voting shares of the bank are listed on a recognized stock exchange and are publicly held. Small banks, defined as those with equity less than CAD 2bn, are not subject to specific ownership restrictions; however, the “fit and proper” test still applies. 

Telecommunications: In 2012, the Government amended the Telecommunications Act to lift foreign investment restrictions for companies that hold less than a 10 percent share of the total Canadian telecommunications market based on revenue. However, a foreign entrant wishing to enter the Canadian market cannot acquire Canadian companies that push them beyond the 10 percent market share limit; they must grow beyond this level by competing and adding to their subscriber base. All carriers will continue to be subject to Canadian laws, including those enacted to protect public safety and national security and the Investment Canada Act. Restrictions on foreign ownership under the Broadcasting Act are in place for all carriers with broadcasting distribution activities.  

The Telecommunications Act currently imposes a cap of 20 percent of the voting shares of a Canadian telecommunications carrier  that may be held by non-Canadians and 33 1/3 percent of the voting shares of a carrier's that may be held by parent company. Regulations enacted under the Telecommunications Act have established a holding company arrangement with the effect of permitting foreign investment up to a level of 46.7 percent based upon 20 percent direct investment plus 33 1/3 percent indirect investment. Since the focus of the Canadian ownership requirements is on voting shares, foreign investors often seek to maximize ownership through non-voting securities, debt and other arrangements. In such cases, regulators reviewing a carrier’s proposed ownership structure will consider ownership compliance with regard to a ‘control in fact’ test, which considers whether minority or non-voting interests might nevertheless have significant influence over the strategic decision-making activities of a carrier, amounting to control.

There can be 100 percent foreign ownership of telecommunications entities that do not own facilities (e.g., resellers of telecommunications services), as well as of telecommunications carriers whose revenues account for less than 10 percent of total Canadian telecommunications revenues.

In addition, 80 percent of the board of directors of a carrier must be resident Canadians, and the arrangements non-Canadians have with the carrier must not enable them to exercise "control in fact" over the carrier – as determined by the Canadian Radio-television and Telecommunications Commission and Industry Canada. 

Income, capital gains and sale proceeds can be repatriated freely.

There are no restrictions on a foreign investor's ability to repatriate investment or profits. Canada has no exchange controls and the Canadian currency is freely convertible to other currencies.

Payments Canada, is a not-for-profit association created in 1980 by an Act of Parliament. Payments Canada currently operates two systems for the clearing and settlement of Canadian payments: the Lynx high-value payments system and the Automated Clearing Settlement System (ACSS). In addition, the US Bulk Exchange (USBE) system, a parallel system to the ACSS, is used for the clearing of payment items in US dollars. Settlement of USBE payments is carried out through correspondent banks in New York. 

Payments Canada is modernizing the Canadian payments infrastructure with a vision for faster, safer, data-rich payments ecosystem. A key component of modernization includes the replacement of the Large Value Transfer System (LVTS) with Lynx, which was completed in August 2021. For further details and updated information, please refer to the Payments Canada Modernization website.

Lynx (High-value payment system)

Lynx is Canada’s new high-value payment system, which replaced the LVTS in August 2021. It is a real-time gross settlement system that facilitates the irrevocable transfer of wire payments in Canadian dollars between Canadian financial institutions across the country. Lynx is operated by Payments Canada and regulated by the Bank of Canada.

Lynx maintains and builds on the key attributes and robustness of the LVTS including:

• Payments finality and settlement certainty
• Flexibility for future technologies, including interfaces and APIs
• Enhanced cyber security and resiliency capabilities
• Enhanced safety and soundness

Lynx was built in compliance with Canadian and international risk standards and is designated as a systemically important payment system by Bank of Canada under the Payment Clearing and Settlement Act.

Direct participants in Lynx must establish and maintain a Lynx settlement account at the Bank of Canada. Certain financial institutions participate directly in the system, while others arrange Lynx payments for their customers through direct Lynx participants.

Payments Canada administers the daily operations of Lynx as well as the rules that support this system. The legal foundation for Lynx is provided in Payments Canada’s Lynx By-law and in the Payment Clearing and Settlement Act.

Lynx supports global ISO 20022 messaging standard and in March 2023 implemented ISO 200022 payments .  Lynx will continue to process MT and MX payments during co-existence period which is expected to last until Nov. 2025.

High Value Payment System Wires Statistics (LYNX, 2022)

Total Volume - 12.56 million items
Daily Average volume - 50,249 items
Total Value - CAD 110 trillion
Daily Average Value - CAD 440 billion

Source: Payments Canada 

Automated Clearing Settlement System (ACSS)

The ACSS, or retail batch  payment system, is the system through which the vast majority of Payments Canada payment items (both paper-based and electronic) are cleared through various payment streams. Members connect to this system securely via the CSN (Canadian Payments Association Services Network), which is owned and managed by Payments Canada.

ACSS and USBE supports 99 per cent of the daily transaction volume and 13 per cent of the daily transaction value cleared by all Payments Canada’s systems.

Automated Clearing Settlement System Statistics (2022)

Total Volume – 9.1 billion items
Daily Average volume – 36.5 million
Total Value - CAD 9.1 trillion
Daily Average Value - CAD 36.4 billion

Source: Payments Canada 

The volumes and values of payment items that are exchanged between participants are entered into the ACSS System, and the system calculates the net balances across all participants. Rules and standards detail how the exchange, clearing and settlement of retail payments must occur.

Specific participant financial institutions, referred to as direct clearers, participate directly in the ACSS. These participants handle the clearing and settlement of payments for their own customers, as well as for customers that maintain accounts at the other financial institutions, known as indirect clearers. Direct clearers must maintain settlement accounts at the Bank of Canada. Settlement of the previous day’s net balances occurs during the morning of each business day, where settlement account balances are extinguished via payments to and from the Bank of Canada.

The ACSS clears paper-based and electronic payments.

US Dollar Bulk Exchange

The US Dollar Bulk Exchange (USBE) is a parallel system to the ACSS. The USBE is used for payment items in US dollars, drawn on a U.S. dollar account at financial institutions in Canada, but settled in the U.S.

Each participant makes entries to reflect the exchange of payment items in various streams with every other participant. Although it is not a clearing and settlement system in the same sense as the Retail System, it provides a similar mechanism to track the exchange of US dollar payment items and the resulting balances due to and from participants. Settlement is effected through correspondent banks in New York and is accomplished through a series of wire payments, and the Bank of Canada is not involved in this process.

Balances are calculated on a bilateral basis between each pair of participants rather than on the multilateral basis used for the ACSS.

Source: Payments Canada

Real-Time Rail  

Originally planned for launch in mid-2023 but now under review with Payments Canada, the Real-Time Rail (RTR) will introduce real-time exchange, clearing and settlement of low-value payments in Canada, providing the ability to initiate payments and receive final and irrevocable funds in seconds, 24/7/365. RTR will deliver faster, data-rich payments in accordance with the ISO 20022 standard, complemented by the flexibility and scalability to introduce new payment products and innovations as they become available.

Payments Canada is working closely with RBC and other industry participants to develop the new RTR. Priorities in 2022 included system development and testing, and completing the bylaws, rules and standards for the new system. The implementation plan includes multiple releases to get to full functionality over two to three years. The RTR workstream is currently on pause while Payments Canada conducts a risk mitigation and review assignment. Further details and information on the RTR program  is expected to be available in December 2023, following PC Board meeting.

Continuous Linked Settlement Bank (CLS)

The CLS Bank is an international banking industry initiative to reduce and control the risks associated with the settlement of foreign exchange transactions. CLS Bank began operations in September 2002.

CLS is an Edge Act corporation located in New York, regulated by the US Federal Reserve and holds settlement accounts with central banks in countries in which they operate to settle foreign exchange transactions. CLS Group Holdings AG, incorporated in Switzerland and regulated by the US Federal Reserve, is the parent company to the CLS group of companies, including CLS Bank International (CLS Bank). Shareholders of CLS Group Holdings are some of the world's largest foreign exchange trading banks, and include a number of Canadian banks.

CLS' role is a systemically important one within the financial market infrastructure and as such is required to comply with the Principles for Financial Market Infrastructure (PFMI) standards, designed to ensure that the infrastructures supporting global financial markets are robust and are equipped to withstand financial shocks.

CLS Bank operates the largest multi-currency cash settlement system to mitigate settlement risk in the foreign exchange market. The CLS Bank arrangement is a real-time electronic system designed to simultaneously settle net foreign exchange positions of each Settlement Member through central bank accounts. The Canadian dollar is one of 18 currencies within CLS. CAD CLS pay-ins (funds owing to CLS Bank) from designated CAD Settlement Member Nostro Clearing Agents are processed through the CLS Bank account at the Bank of Canada on behalf of their respective Settlement Member clients.

In turn, the CLS Bank makes pay-outs (credits owing) to their Settlement Members through the CLS Bank account held with the Bank of Canada. Royal Bank of Canada (RBC) is a Settlement Member, a CAD clearing agent (for CAD Settlement Members), and a CAD (backup) Liquidity Provider to CLS Bank.

Payment Reporting Requirements

Large Cash Transactions (LCTs)

Cash deposited in a consecutive 24-hour period that amounts to $10,000CAD or more must be reported to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s financial intelligence unit, within 15 calendar days. These transactions comprise:

• single individual cash received transactions of $10,000 CAD equivalent or more
• accumulated cash that is received from, on behalf of, or for the benefit of the same person or entity

Electronic Funds Transfers (EFTs)

International EFTs initiated or finally received in a consecutive 24-hour period that amount to $10,000CAD or more must be reported to FINTRAC within 5 business days. These transactions comprise:

• an EFT that is equal to or greater than $10,000 CAD equivalent
• two or more EFTs that total $10,000 or more, within 24 consecutive hours, where the reporting institution knows that the EFTs are initiated at the request of the same person/entity, the requests are made on behalf of the same person/entity, or the amounts are for the same beneficiary

The $10,000CAD rule applies to commercial payments such as SWIFT MT103s or equivalent electronic transactions, but does not apply to domestic payments or to bank-to-bank SWIFT payments (SWIFT MT202, i.e., member institution payments).

For more information, please visit FINTRAC's website.

Overdrafts are permitted in the Canadian market. However, as a standard practice for financial institution clients, daylight overdrafts are both discretionary and unadvised and are provided to support the smooth flow of intra-day payments.

N/A

Generally quarterly, but may be semi-annual or monthly (as declared by the issuer)

Generally semi-annual, but may be monthly, quarterly or annual (as declared by investor)

Generally actual/365-day basis

Rights, tender offers, mergers, plan of arrangements, stock splits, exchanges, dividend reinvestment plans (DRIPs) and Dutch auctions

Rights Tradeable

Yes, trading must be executed on the open market. A selling feature is not provided as part of the corporate action event.

For additional information, please refer to RBCIS' online Corporate Actions Guide*.

*Note: A user ID and password are required. Please contact your RBCIS representative for more information.

N/A

No

No

Annual general meetings are announced four to six weeks in advance. Lead time for extraordinary meetings varies. Meeting season is primarily held during the months of March, April, May and June.

VIFs (Voter Instruction forms) are available in English or French based on client account preference. Language of additional documentation is in English (but at the discretion of the issuer).

Upon request, subject to availability

Upon request, subject to availability

Not required

Shareholders may submit their voting instructions online, by fax, and/or postal mail. 

Entitlements Calculations

Settled positions as of close of record date are entitled to vote.

Voting Rights

Common stocks have voting rights. Preferred and restricted stocks generally do not have voting rights. In Canada, 'ABSTAIN' is a valid vote option known as 'WITHHOLD' that does not count towards quorum and is not a vote with management unless the proposal is blank.

Special Processes

Canadian issuers are legally entitled to request the name and address of their non-objecting beneficial shareholders and appoint an agent to distribute information to those shareholders. This agent may differ from the custodian appointed agent. In addition, objecting beneficial shareholders that indicate costs for meeting information may be excluded from the distribution of the annual meeting information. Please refer to National instrument 54-101 for more details. For director resolutions, valid client vote options are, 'FOR' or 'WITHHOLD'.

The withholding tax rate is 25 percent on dividend payments and amounts credited to non-residents.

The standard 25 percent tax rate may be reduced to a lower treaty rate if there is a tax treaty in force between Canada and the foreign jurisdiction.

Since January 1, 2008, most interest payments made to non-residents of Canada have been exempt from withholding tax, regardless of residence of the payee.  The exemption is allowed under Canadian domestic law.

The withholding tax exemption does not apply to:

- Payments of interest to related parties (exception for government or government guaranteed debt); and

- Certain “participating interest” amounts from Canadian sources paid to a non-resident, where the amount of interest is computed by reference to one or more criteria such as revenue, profit, cash flow, dividends paid, commodity price, etc. In situations where these types of Canadian source interest are being paid, either the Canadian domestic tax rate of 25% or a lower applicable treaty rate may be applied.

Foreign investors are generally not subject to Canadian taxation on their capital gains unless the property disposed of is considered Taxable Canadian Property. Taxable Canadian Property is a defined term in the Income Tax Act (Canada) and includes, among other things, interests in real estate located in Canada, Canadian resource property, and capital property used in carrying on business in Canada. Publicly traded securities

can also be considered Taxable Canadian Property in certain circumstances.

For additional information, please refer to RBC Investor Services' online Withholding Tax Guide*, a comprehensive guide to Canadian withholding tax rules and regulations for foreign investors.

*Note: A user ID and password are required. Please contact your RBC Investor Services representative for more information.

None

Trust Income Tax Rate

The non-resident tax rate is 25 percent, which may be reduced by treaty benefits.

The treaty rate applicable to trust distributions often differs from the rate applicable to dividends. The applicable treaty determines whether a reduced rate may apply and what the reduced rate will be. A number of tax treaties stipulate that the trust income must be taxable in the recipient’s country of residence in order to qualify for treaty benefits. Income such as dividends and interest received by a trust (with non-resident beneficiaries) are income of the trust, not the beneficiaries. On allocation to a non-resident, the amounts paid or credited to the non-resident do not retain their source identity, but are considered trust income for non-resident withholding tax purposes.

Canada Holiday Calendar

• Toronto Stock Exchange  tsx.com
• TSX Venture Exchange  tsx.com
• Montreal Exchange m-x.ca
• CanDeal candeal.ca
• Bank of Canada bank-banque-canada.ca
• SEDAR sedar.com
• Canadian Depository for Securities cds.ca
• Office of the Superintendent of Financial Institutions osfi-bsif.gc.ca
• Canadian Securities Administrators securities-administrators.ca
• Alberta Securities Commission albertasecurities.com
• BC Securities Commission bcsc.bc.ca
• Ontario Securities Commission osc.gov.on.ca
• Autorité des marches financiers lautorite.qc.ca
• Investment Industry Regulatory Organization of Canada iiroc.ca
• Canadian Investor Protection Fund cipf.ca
• Canada Revenue Agency cra.arc.gc.ca
• Canadian Derivatives Clearing Corporation https://www.cdcc.ca/index_en
• Financial Transactions and Reports Analysis Centre of Canada \http://www.fintrac-canafe.gc.ca/intro-eng.asp 
• Payments Canada: www.payments.ca