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Dematerialization - The Way Forward

Today's rapidly evolving business landscape requires CDS, Canada's national securities depository, to continuously seek out new ways to serve our broad range of clients more efficiently and effectively. Advances in technology within the financial industry have enabled CDS to move beyond physical certificates and to implement fully electronic processes for facilitating registry, custody, settlement and transferability of securities. The elimination of definitive physical certificates, or securities dematerialization, will result in lower costs as well as enhanced settlement services.

Why issue in a Dematerialized format?

For both public and private capital raising activities, dematerialization offers a variety of benefits, including:

  • Reduced costs to issuers and financial intermediaries for issuance, trading, transfer and settlement activities,
  • Streamlined settlement process and/or expedited settlement periods for securities trading, account transfers and corporate action events,
  • Risk mitigation by eliminating potential loss or improper destruction of securities' certificates; and
  • Safer registration process with the removal of potential forgery or fraudulent mis-presentation of cancelled certificates.

How will this impact issuers?

In August 2017, CDS plans to take a significant step to achieving a dematerialized Canadian securities market, by stopping the intake, of non-BEO (Book Entry Only) security certificates as an acceptable method to evidence security positions registered in CDS' nominee name.

In order to provide depository services to participants, CDS requires confirmation of the position in the issuer's (or its agent's) register. Following dematerialization, the confirmation process will be conducted in one of two ways:

  1. Through an electronic confirmation provided by the Issuer or its Agent (referred to as a Non-Certificated Inventory, or NCI) for both BEO and non-BEO securities, or
  2. A CDS&Co. registered global certificate, as described in the Issuer Procedures to the BEO Securities Services Agreement, for BEO securities only.

Going forward, CDS will continue to accept certificates for BEO securities, but we strongly encourage issuers to issue non-certificated inventory (NCI) positions, that are subject to electronic confirmation and eliminate the need for physical certificates.

An NCI environment within the CDS depository system can be facilitated by most transfer agents in Canada, as well as through a variety of financial intermediaries who are also CDS participants. Issuers are also advised to employ an NCI treatment within CDS when drafting offering documents for their new security issuances and in selecting agents, whenever applicable.

Useful links

Debt security issuers are invited to view and utilize, where applicable, the sample trust indenture created by CDS which permits the issuance of uncertificated debentures. This sample trust indenture may be found here:

Further information on CDS BEO Services may be found here: Please note that in order to gain acceptance, each global certificate for a BEO security must bear the proper legend as indicated in the Issuer Procedures to the BEO Securities Services Agreement located here:


If you have questions regarding the dematerialization of your certificates, please contact: and/or