They are three of the most-used – and most-complained-about – databases in Corporate Canada, and they are finally facing a new life under a new operator.
Known by the acronyms SEDI, SEDAR and NRD, the three key computerized filing systems operated by Canada securities commissions are about to be outsourced to Montreal-based technology company CGI Group Inc. The hope is that CGI will make the three systems less expensive for users and perhaps eventually easier to operate.
SEDI – the System for Electronic Disclosure by Insiders – is the cumbersome system for companies and corporate insiders to file information about their securities trades and purchases, theoretically allowing the public to track insider trading and transactions. SEDAR – the System for Electronic Documents Analysis and Retrieval – is the database for public companies to file all their disclosure documents, such as earnings releases or annual reports. And NRD is the National Registration Database, where securities dealers and advisers file their annual registration forms.
The three systems were run under contract by CDS Inc., a unit of the Canadian Depository for Securities, which is owned by TMX Group Ltd. With CDS's contract facing expiration in October this year, the umbrella group for Canada's securities commissions decided last year to issue a public tender for the services.
The Canadian Securities Administrators (CSA) announced this week that CGI put in the winning proposal.
The key to CGI's new management of the systems will be its ability to bring down operating costs and pass along savings to market participants. The CSA has already published proposed new pricing for SEDAR and NRD users, pledging to lower costs. Based on recent filing patterns, the CSA said it expects SEDAR fees to decline for about 40 per cent of filings and drop in 24 per cent of NRD filing cases, while remaining unchanged in other cases.
In a request for comment on the new fees, the CSA said it believes the fee changes "will have no impact on service levels or the general operation and development" of the systems. The new contract with CGI will run for five years, but is extendible for up to three more.
The loss of the contract will take a bite out of revenue for the Canadian Depository for Securities. The company earns the bulk of its money from depository, clearing and settlement operations, but nonetheless reported revenue of $14.8-million in fiscal 2012 from the three databases, accounting for 16 per cent of its total $91-million in revenue last year.
Carolyn Quick, spokeswoman for the TSX, which owns CDS, said it is too soon to say how the loss of the contracts will affect staff levels at CDS.
CGI will cut costs in part by the economies of scale from moving the SEDAR, SEDI and NRD data into its existing major data centres in Quebec and Ontario, with monitoring done from centres Moncton and Halifax, said company spokesman Lorne Gorber.
Mr. Gorber said the contract won't immediately lead to a CGI overhaul of the web sites from a user perspective, but said the CSA is pondering a Phase Two of the project that should see a tender go out for redesigned user interfaces. He said CGI will be a bidder when the next phase happens.
SEDI in particular is in need of an overhaul to improve its usability both for insiders filing on the system and for the public trying to view documents. The database had a tortuous birth on Oct. 29, 2001, operating for just three months before being shut down due to technical difficulties. It was not restarted until May, 2003, and its relaunch was staged so that staff could provide users and the public "with better support" as they tried to manoeuvre the complex site.
Despite the remake, the CSA faced numerous complaints about the cumbersome user interface, and did a public opinion survey in 2005 and 2006 that found plenty of dissatisfaction for those trying to find their way through SEDI's bewildering pages.
(Janet McFarland is a Globe and Mail Business Reporter.)
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