Canadian securities regulators seek input on the proposed derivatives registration rule
Vancouver – The Canadian Securities Administrators (CSA) today published for comment Proposed National Instrument 93-102 Derivatives: Registration and Proposed Companion Policy 93-102 Derivatives: Registration (collectively, the Proposed Instrument). The Proposed Instrument establishes a new regime for the registration of dealers and advisers transacting in the over-the-counter (OTC) derivatives markets in Canada.
The Proposed Instrument together with Proposed National Instrument 93-101 Derivatives: Business Conduct (NI 93-101), which was published for comment on April 4, 2017, establishes a comprehensive investor protection regime for OTC derivatives markets that is consistent with international standards and foreign requirements. The CSA has developed the Proposed Instrument to help protect investors, reduce risk, and improve transparency and accountability in the OTC derivatives markets.
“Canadian firms, large and small, as well as individuals, are using the OTC derivatives market to hedge their business and financial risks and for speculative purposes,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We believe the proposed registration regime will allow securities regulators to contribute to protecting these firms and individuals in their derivatives activities by establishing minimum standards of integrity, solvency and proficiency for firms and individuals offering OTC derivatives products or related advice.”
“Many of the entities that would be required to be registered under the Proposed Instrument are already subject to other regulatory regimes,” continued Mr. Morisset. “The Proposed Instrument includes provisions to minimize duplicative regulation for these entities.”
In developing the Proposed Instrument, the CSA leveraged the existing registration regime in the securities market while tailoring the requirements to the OTC derivatives market. The Proposed Instrument sets out fundamental obligations for OTC derivatives dealers and advisers. These include requirements designed to mitigate risks to market participants, requirements for key staff members of derivatives dealers and advisers to have specific education, training and experience, and requirements for firms and individual representatives to register with applicable securities regulators in Canada.
The Proposed Instrument provides exclusions and exemptions for certain persons or companies from the requirements to register as a derivatives dealer or as a derivatives adviser subject to certain conditions.
The CSA anticipates publishing NI 93-101 for a second comment period during the consultation period for the Proposed Instrument. The CSA is holding an extended comment period (150 days) on the Proposed Instrument, to give stakeholders the opportunity to consider the Proposed Instrument and NI 93-101 together. Comments should be submitted in writing on or before September 17, 2018.
The Proposed Instrument can be found on CSA members’ websites.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
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