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Clearing of Derivatives Arrives in Canada
By Nik Venema | February 3, 2014

The Canadian Securities Administrators (CSA) published the CSA Staff Notice 91-304 on January 16, 2014. The CSA, otherwise known as the “Central Clearing Rule,” was established by the CSA back in December 19, 2013, and is now forming the basis for the proposed Canadian rules to central counterparty clearing. The clearing of derivatives along with regulatory compliance has always been a lengthy and arguably mysterious, process. With this new rule now describing the proposed requirements for central counterparty clearing of OTC derivatives transactions, there is a new solidified step in the direction of improving transparency in Canada’s public derivatives market and financial regulatory landscape.

The rule is comprised of two broad-rule making areas:
• Mandatory clearing of derivatives and those related to protecting the customer collateral and positions; and
• Determination of derivatives that will be subject to mandatory clearing to improve derivatives clearing agencies’ resilience to a clearing member default

The CSA is accepting comments on the rule up until the March 19, 2014 deadline. Shortly after, it is expected that individual provincial rules will be published to address specific features in each province. However the intent is that the provincial rules will be harmonized with international standards and stay consistent across Canada.

Read more about the CSA Consultation Paper 91-404 Derivatives