Corporate Restructuring of CDS Mark Weseluck – Executive Director, Customer Service and Product Development ACSDA General Assembly – Panama City February 22, 2008

Previous CDS Structure Current shareholders 6 Banks TSX IDA The Canadian Depository for Securities Limited Securities clearing and depository services CDS INC. SEDAR SEDI NRD Information dissemination

New CDS Structure as of November 1, 2006 Current shareholders 6 Banks TSX IDA The Canadian Depository for Securities Limited Holding company CDS INC. CDS Clearing and Depository Services Inc. CDS Innovations Inc. SEDAR SEDI NRD Securities clearing and depository services Information dissemination

Corporate Restructuring Why restructure? Segregate regulated and unregulated services for simplification of regulatory and financial reporting Mitigate risk spillover between different lines of business Provide the organization with the flexibility to establish new services within current or future subsidiaries

Corporate Restructuring Impacts Corporate restructuring had various internal and external impacts: Regulatory oversight Corporate governance Legal considerations Financial issues Staff considerations

Regulatory Oversight Regulators advocated clearer separation of core and non-core services to reduce risk spillover Proposed new structure required approval/non-disapproval from CDS’s three regulators Formal oversight arrangements in place for regulation of core services Revised governance structure required as part of restructuring

Corporate Governance

Legal Considerations Most extensive role in implementing corporate restructuring: Analysed possible legal structures Co-ordinated and effected regulatory, governance, legal and documentation issues Reviewed and assigned contracts to reflect new companies Re-applied for CDS as member in other depositories

Financial Issues Cost allocation of shared corporate services among subsidiary companies (direct and indirect costs) Distribution of surpluses Cross charging of support between sister companies Tax considerations

Staff Considerations All staff employed by CDS Limited Assigned to subsidiary companies as applicable Corporate services provided to subsidiaries through service level agreements Greater planning and co-ordination required for use of shared services Opportunities for developing/advancing staff

Lessons Learned Start as early as possible Have a dedicated team and manage as a project Keep regulators informed throughout the process Keep staff informed about the impact and progress of the project Don’t underestimate the effort required to advise external parties and effect the legal changes