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Members of the Canadian Securities Administrators (CSA) have published for comment Proposed National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives.

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The proposed rule describes requirements for central counterparty clearing of over-the-counter (OTC) derivatives transactions, and is intended to improve transparency in the derivatives market while enhancing systemic risk mitigation. It was developed following public comments received on CSA Consultation Paper 91406 OTC Central Counterparty Clearing, published in June 2012, and CSA Notice 91-303 Proposed Model Provincial Rule on Mandatory Central Counterparty Clearing of Derivatives, published in December 2013.

The proposal is divided into two rule-making areas:

  • the determination of derivatives (each a mandatory clearable derivative) that will be subject to the requirement to submit for central counterparty clearing; and
  • the requirement to submit a transaction in a mandatory clearable derivative to a recognized or exempted central counterparty for clearing (including proposed end-user and intragroup exemptions).

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“Achieving greater transparency in the OTC derivatives market is a key component of the post-financial crisis regulatory reform committed to by the Group of Twenty (G20) nations to reduce systemic risk,” said Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission. “In meeting Canada’s commitment to the G20, the CSA intends to establish a nationwide harmonized derivatives clearing regime that is in line with international standards.”

For additional information about central counterparty clearing reform in Canada, the public may review the recently published Proposed National Instrument 24-102 Clearing Agency Requirements and the January 2014 publication of CSA Staff Notice 91-304 Model Provincial Rule – Derivatives: Customer Clearing and Protection of Customer Collateral and Positions.

Following this consultation, the CSA will review all comments received and make appropriate amendments. The CSA will then follow established processes to implement the amendments across Canadian provinces and territories.

The proposed clearing rule can be found on CSA members’ websites. The comment period is open until May 13, 2015.

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