Regulators ponder new benchmark

The Ontario Securities Commission and the Autorité des marchés financiers are seeking public comment on a proposal to designate a new financial benchmark to help replace the Canadian dollar offered rate (CDOR), which will be phased out by mid-2024.

The regulators published a joint notice seeking public comment on an application from CanDeal Benchmark Administration Services Inc. to approve Term CORRA as a designated interest rate benchmark under securities rules, with CanDeal as its administrator.

The existing benchmark, CDOR, is due to be phased out on June 28, 2024, and will be replaced by the Bank of Canada’s Canadian overnight repo rate average (CORRA) for most instruments.

Term CORRA is also being developed as a forward-looking version of the new benchmark to be used in certain instruments, such as loans, loan-based derivatives and trade finance agreements.

The initial tenors of Term CORRA, which will be based on trading in CORRA futures on the Montréal Exchange, are expected to be launched in September.

On July 5, CanDeal launched a beta version of one- and three-month Term CORRA rates for testing before its final release.

“The beta launch of the Term CORRA reference rates marks an exciting milestone in bringing a new benchmark to the market this year,” said Andre Craig, president, CanDeal Data & Analytics, in a release.

“These forward-looking term rates are destined to replace CDOR with a risk-free, robust standard for trading across the Canadian loan and derivatives markets,” added Louise Brinkmann, head of CanDeal Benchmark Solutions.

The regulators are seeking to approve Term CORRA as a designated benchmark, with CanDeal as the designated administrator.

The comment period on the proposal will close on Aug. 8.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.