Introduction

On February 16 2016 the Canadian Securities Administrators announced proposed changes to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting and the related Companion Policy 96-101CP (together, the 'TR Rule'), published earlier this year by the securities regulatory authorities in Alberta, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan and Yukon (collectively, the 'participating jurisdictions'). Similar derivative trade reporting rules are already in effect in Manitoba, Ontario and Quebec. For information on the TR Rule in the participating jurisdictions see "Canadian provinces implement derivatives scope and trade reporting rules". Derivatives trade reporting in the participating jurisdictions begins on July 29 2016 for clearing agencies and derivatives dealers and on November 1 2016 for other reporting parties. The comment period for the proposed amendments ends on April 17 2016. The proposed amendments are substantively harmonised with the proposed amendments to the existing rules. Similar amendments to the TR Rule in British Columbia are expected to be announced shortly.

Protecting anonymity of publicly disseminated data

Recognising that the publication of anonymised transaction-level data by designated trade repositories could allow market participants to determine the identity of counterparties to specific over-the-counter (OTC) derivative transactions, the participating jurisdictions propose to limit the trade reporting disseminated publicly under the TR Rule to certain asset classes and underlying benchmarks that exhibit sufficient market activity. This is designed to make it difficult to identify a specific counterparty. Additional anonymising measures (rounding, caps) are prescribed with respect to transaction details. The proposed amendments introduce Appendix C to the TR Rule, which sets out:

  • the types of OTC transaction that are subject to public dissemination;
  • the data required to be disseminated;
  • certain exclusions from the dissemination requirement; and
  • other mechanisms for protecting anonymity, including the requirement for a designated trade repository to round the notional amount of a transaction and the reporting of a prescribed capped rounded notional amount in place of the rounded notional amount in certain situations.

The effective date of the requirement for the trade repository to publicly disseminate transaction-level data for certain derivatives reported to it is harmonised across Canada to July 29 2016 instead of January 1 2017.

Relief from reporting transactions between affiliates

The proposed amendments provide relief from reporting transactions between affiliated end-user counterparties. In order to make use of this exclusion, neither counterparty can be a derivatives dealer, a recognised or exempt clearing agency or an affiliate of such an entity. In addition, either each affiliate must be a local counterparty in a province or territory of Canada or trade reporting must be done in compliance with the equivalent trade reporting laws of those foreign jurisdictions listed in Appendix B (currently, the United States and the European Union) or under the laws of another province or territory of Canada.

Obligation to obtain legal entity identifier

The proposed amendments introduce a new requirement that each eligible local counterparty to a reportable transaction obtain a legal entity identifier (LEI) in accordance with the standards set by the Global Legal Entity Identifier System. In addition, for transactions with counterparties that are not eligible to obtain an LEI (eg, an individual), the reporting counterparty and the designated trade repository must identify a non-eligible counterparty using the same alternative identifier.

Trade reporting for end users previously excluded

The proposed amendments provide for a transition period of 180 days for end-user counterparties that cease to qualify for an exclusion from the reporting requirements.

For further information on this topic please contact Carol E Derk or Melanie M Bradley at Borden Ladner Gervais LLP by telephone (+1 416 367 6000) or email (cderk@blg.com or mebradley@blg.com). The Borden Ladner Gervais website can be accessed at www.blg.com.

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