Mr. Speaker, I am pleased to join in the debate to Bill S-9, an act respecting depository bills and notes and to amend the Financial Administration Act.
Departmental officials have indicated that the depository bills and notes act is a technical piece of legislation needed to support improvements in the efficiency of capital markets in Canada. The bill is intended to modernize outdated federal legislation dealing with the transfer of banker's acceptances and commercial bills.
The bill addresses mobilization, meaning a physical instrument will be used but will be held in custody by a clearing house or the like until book entries can be made to show transfer of ownership. With the new technology available today there is no longer a paper transfer during a trade. A simple book entry is made. This bill does not actually spell out which one of these two acts is the case. Instead the transaction is governed by the rules of the depository house.
I would like to know whether this is common with similar legislation in other financial markets. For instance, if two individuals entered into an agreement where one's interest is transferred to the other but the depository is not notified of the transaction until just before maturity, who has the legal right to the interest before the custodian of the bill has been notified? Is it the buyer or the seller?
Furthermore, this legislation deals with electronic transactions and pushes the markets further away from the old system of paper trading and any protection offered against the millennium bug or what is now known as the Y2K risk.
A leading economist from New York, Edward Yardeni, has suggested that the Y2K problem is far worse than the American government likes to admit, partly out of the government's fear over lawsuits.