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  • Writer's pictureDeborah

On April 29, 2021, the Canadian Securities Administrators (CSA) released the finalized version of Multinational Instrument 25-102 ‘Designated Benchmarks and Benchmarks Administrators and companion policy' (MI 25-102).

Prior to MI 25-102, benchmarks, and persons or companies that administer them, contribute data that is used to determine them, and use them, were not subject to formal securities regulatory requirements or oversight in Canada.

The regime goal is to prevent misconduct involving benchmarks that can have significant negative impacts on capital markets locally and internationally as was the case with the LIBOR.

MI 25-102 aims at implementing a comprehensive regime for:

  • The designation and regulation of benchmarks (designated benchmarks),

  • The designation and regulation of persons or companies that administer such benchmarks (designated benchmark administrators, DBA),

  • The regulation of persons or companies, if any, that contribute certain data that will be used to determine such designated benchmarks (benchmark contributors or contributors), and

  • The regulation of certain users of designated benchmarks who are already regulated in some capacity under Canadian securities legislation (benchmark users or users).

Under MI 25-102, the Canadian Dollar Offered Rate (CDOR which is used in various financial instruments) is designated as a designated critical benchmark and a designated interest rate benchmark with the Refinitiv Benchmarks Services Limited (RBSL) as its unique administrator.

The CSA does not currently intend to designate the Canadian Overnight Repo Rate Average (CORRA) as a designated benchmark, as the Bank of Canada is its current benchmark administrator.

Some of the key provisions are described below.


“Designated critical benchmark” is defined as a benchmark that is designated as a “critical benchmark” by an order or a decision of the regulator or securities regulatory authority.

“Designated interest rate benchmark” is defined as a benchmark that is designated as an “interest rate benchmark” by an order or a decision of the regulator or securities regulatory authority.

“Designated Benchmark contributor” is a person or company that engages or participates in the provision of information for use by a benchmark administrator for the purpose of determining a benchmark.

“Designated Benchmark User” means a person or company that, in relation to a contract, derivative, investment fund, instrument or security uses a benchmark.

Requirements for Benchmark Administrators

As its EU equivalent, most of the requirements under MI 25-102 fall on benchmark administrators that must comply with various obligations including:

  • Delivering audited annual financial statements, code of conduct and certain forms to Canadian securities regulators.

  • Establishing and maintaining a sound culture of governance (e.g. Oversight committee…).

  • Establishing and maintaining policies and procedures relating to input data, the contribution of input data as well as the benchmark methodology used.

  • Publishing information about the administration of its designated benchmarks (e.g. methodology, benchmark statement…).

  • Keeping specified books, records and documents for a period of 7 years.

Disclosure - Registrants, registered entities and recognized entities

MI 25-102 requires a person or a company (i.e. Registrant, reporting issuer, recognized exchange, recognized quotation and trade reporting system, recognized clearing agency) that uses a designated benchmark to establish and maintain a written plan setting out the actions that the person or company would take in the event that the designated benchmark significantly changes or ceases to be provided.

Benchmark contributors

Code of conduct for benchmark contributors

When using input data from benchmark contributors, the benchmark administrator of the designated benchmark must establish, document, maintain and apply a code of conduct that specifies the responsibilities of benchmark contributors with respect to the contribution of input data for the designated benchmark.

Governance and control requirements for benchmark contributors

A benchmark contributor to a designated benchmark is required to

  • Establish, document, maintain and apply policies and procedures relating among other things to: conflict of interest, the accuracy and completeness of each contribution of input data to the designated benchmark administrator.

  • Establish, document, maintain and apply policies and procedures reasonably designed to guide any use of expert judgment.

  • Keep, for a period of 7 years from the date the record was made or received by the designated benchmark administrator (e.g. communication related to input data, description of the potential for financial loss or gain of the benchmark contributor…).

Designated Critical Benchmarks

MI 25-102 include the requirement for a benchmark contributor to a designated critical benchmark to promptly notify in writing the designated benchmark administrator if it decides to cease contributing input data.

Designated Interest Rate Benchmarks

Where required by the oversight committee of the benchmark administrator, the benchmark contributor must engage a public accountant to provide a limited assurance report on compliance or a reasonable assurance report on compliance regarding the conduct of the benchmark contributor and its compliance with, inter alia,

  • The benchmark administrator relevant policies and procedures. The benchmark contributor relevant policies and procedures.

  • The methodology of the designated interest rate benchmark.

  • It must, within 10 days of the receipt of a report, deliver a copy to the oversight committee, the board of director of the benchmark administrator and the regulator or securities regulatory authority.

MI 25-102 requires each contributing individual of the benchmark contributor and the direct managers of that contributing individual to provide a written statement to the benchmark contributor and the designated benchmark administrator that they will comply with the code of conduct.

The benchmark contributor must establish, document, maintain and apply policies, procedures and controls related among other things to: internal organisation, list and locations of contributing individuals, conflict of interest management, and control of exchanges of information.

The Companion Policy (CP) provides guidance on the provision of MI 25-102.

MI 25 -102 is substantially equivalent to the EU BMR. The instrument will come into force and the CP will come into effect on July 13, 2021.

To note that on the same day was also published a separate notice of proposed amendments to MI 25-102 and the CP regarding commodity benchmarks for which comment period will end on July 28, 2021.

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