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  • Deborah

Released on January 20, the Proposed Instrument, which includes the Companion Policy, follows the last consultation held in September 2018 by the Canadian Securities Administrators (CSA).


The Proposed Instrument (together with the Proposed Registration Instrument - NI 93-102 Derivatives: Registration) aims at implementing a comprehensive regime for the regulations of entities or persons that advise or deal in derivatives. This will bring more transparency, accountability and reduce risks in OTC Derivatives markets.

Highlight of some of the key proposed changes:

  • Addition of a new foreign liquidity provider exemption for foreign dealers when they transact with derivatives dealers in Canada. Entities will not be subject to notice or filing requirements.

  • Addition of a new exemption for foreign sub-advisers that is similar to the exemption for international sub-advisers in NI 31-103;

  • Inclusion of a transition period to allow derivatives firms to treat existing permitted clients, accredited counterparties, qualified parties, as well as eligible contract participants under the US Commodity Futures Trading Commission (CFTC) rules, as Eligible Derivatives Parties (EDPs) for up to five years.

  • Addition of a new exemption for registered advisers from certain requirements if they comply with corresponding requirements in NI 31-103 with respect to their derivatives activity in order to allow registered advisers to leverage their existing compliance systems.

  • Revision of the Senior Derivatives Manager provisions in Part 5 of the Instrument so that they only apply to derivatives dealers and added an exemption from the senior derivatives manager provisions for derivatives dealers that have a limited notional amount of derivatives outstanding.

  • Exemption of derivatives dealers that are IIROC dealer members from many provisions when they comply with IIROC requirements relating to a transaction with a derivatives party that correspond to certain provisions of the Instrument.

Interested stakeholders should submit their comments by March 21, 2022.

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