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Federal financial regulators issued new guidance on Friday that aims to accommodate reforms to financial benchmarks that may impact the ongoing implementation of derivatives reforms.

In a letter to federally regulated financial firms, the Office of the Superintendent of Financial Institutions (OSFI) announced that it will be adopting guidance proposed earlier this year by global regulators regarding margin requirements for non-centrally cleared derivatives.

Back in March, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) released a statement setting out their views on the need to revise derivatives contracts in response to benchmark reform.

As part of these reforms, traditional benchmarks such as LIBOR are being eliminated in favour of transaction-based alternatives in response to the LIBOR market manipulation scandal.

In that guidance, the Basel Committee and IOSCO indicated that they would not require the imposition of margin requirements for derivative amendments that are solely intended to reflect benchmark reform.

On Friday, OSFI declared its support for that position, indicating that Canadian firms won’t be required to apply margin requirements for amendments to existing derivatives due to benchmark reform.

It also said that the ongoing phase-in of initial margin requirements, which runs through 2020, doesn’t require documentation, custodial and operational arrangements until the initial margin to be exchanged approaches $75 million (echoing the €50 million threshold adopted by the global regulators).