Canadian Regulators May Require Central Clearing for Derivatives

Canadian Securities Administrators (CSA) have proposed new rules that would require some over-the-counter derivatives to be centrally cleared.

The CSA proposal is similar to rules being considered by the European Securities and Markets Authority (ESMA) in combining two approaches to defining which instruments must be cleared: a bottom-up approach through which OTC derivatives that a central counterparty (CCP) clears or proposes to clear become subject to a mandatory clearing requirement, and a top-down approach, whereby provincial Canadian regulators have the power to select derivatives for mandatory central clearing, regardless of whether a CCP clears such instruments.

The process for choosing which instruments must be cleared is important because, as the proposal concedes, some derivatives are so illiquid that requiring them to be centrally cleared would force CCPs to choose between imposing substantial margin requirements or taking on excessive risk.

The CSA will accept public comment on the proposed rules until September 21.

Read more about the proposed rules.

Photo credit: Alex Indigo

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

Stay On Top Of The Debt Relief Industry's Regulatory Landscape

On November 6-7, 2022, Shipkevich PLLC will be hosting a Regulatory Workshop in Costa Mesa, California focusing on the fundamental regulatory issues facing debt relief professionals and how they can adapt.