The Reporter provides a monthly summary of significant international and Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions in Canada. It does not address provincial financial services legislative and regulatory developments, although this information is tracked by  BLG and can be provided on request. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.

March 2015

Institution

Published

Title and Brief Summary

Status

Bank of Canada

Issued –
March 31, 2015

Changes to Assets Eligible as Collateral under the Bank of Canada’s Standing Liquidity Facility (SLF)

In January, the Bank of Canada announced its intention to add certain Canadian-dollar term asset- backed securities (ABS) to its list of assets eligible as collateral under the Bank of Canada’s SLF. A consultation period followed and the comments received from market participants were taken into consideration. Two modifications have been made relative to the initial conditions proposed.

 

Effective
March 31, 2015

Finance

Published (Gazette) – March 25, 2015

SOR/2015-57 Canada Deposit Insurance Corporation Data and System Requirements By-law – By-law Amending Canada Deposit Insurance  Corporation Act

The changes proposed are to acknowledge the reality that data collection and systems requirements of a foreign jurisdiction may not be readily compatible with the data and system requirements imposed in the By-law. The amendments extend the time within which a member institution is required to provide information from its foreign branches in a resolution scenario. Further, the amendments relieve a member institution from providing certain information about deposit liabilities posted at foreign branches and  from ensuring that a foreign branch has certain specified capabilities.

 

In Force March 5, 2015

BIS/Basel

Issued March 18, 2015

Margin requirements for non-centrally cleared  derivatives
The framework for margin requirements for
non-centrally cleared derivatives has been revised. Margin requirements for non-centrally cleared derivatives have two main benefits:

  • Reduction of systemic risk. A substantial fraction of derivatives are not standardised and cannot be centrally cleared. Margin requirements for non-centrally cleared derivatives would be expected to reduce contagion and spillover effects by ensuring that collateral is available to offset losses caused by the default of a derivatives  counterparty.
  • Promotion of central clearing. In many jurisdictions, central clearing will be mandatory for most standardized derivatives. But clearing imposes costs, in part because CCPs require margin to be posted. Margin requirements on non-centrally cleared derivatives, by reflecting the generally higher risk associated with these derivatives, will promote central clearing, making the G20’s original 2009 reform programme more effective.

 

Relative to the2013 framework, the full phase-in schedule has been adjusted to reflect this nine-month delay, from
1 December 2015
to 1 September
2016.

The revisions also institute a six-month phase-in of the requirement to
exchange variation margin, beginning 1 September
2016.

 

 

Author

Jeffrey S. Graham 
JGraham@blg.com
416.367.6174

Expertise

Financial Services Sectors
Regulatory