In a move to allow for further study of the Canadian OTC derivatives market, the Ontario Securities Commission (the OSC) has delayed the effective date for the public dissemination of transaction-level data by designated trade repositories under subsection 39(3) of OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting (the Trade Reporting Rule). Originally set to come into effect on April 30, 2015, this requirement will now be effective as of July 29, 2016. This extra time will allow the OSC to develop publication delay rules for certain OTC derivatives transactions that will be designed to maintain the anonymity of counterparties to these transactions.
Appendix B to the Trade Reporting Rule is also being amended to allow certain OTC derivatives market participants to benefit from substituted compliance under the Trade Reporting Rule, in certain limited circumstances, when they report pursuant to the European Union (EU) derivatives trade reporting rules. Substituted compliance is only available if:
- the transaction is required to be reported solely due to the fact that a counterparty to the transaction is a “local counterparty” because it is either registered as a derivatives dealer in Ontario or it guarantees the liabilities of an affiliate based in, or organized under the laws of, Ontario;
- the transaction is reported to a designated trade repository pursuant to the EU derivatives trade reporting rules (now set out in Appendix B); and
- the counterparty that reported the transaction to the EU trade repository instructs that trade repository to provide the OSC with access to the reported data (and otherwise makes it best efforts to provide the OSC with this access).
Finally, the companion policy to OSC Rule 91-506 Derivatives: Product Determination (the Scope Rule) will be amended to provide examples of international market facilities that fall within the meaning of "derivatives trading facility". This will assist market participants in determining which transactions have to be reported under the Trade Reporting Rule, as the Scope Rule deems that contracts traded on prescribed exchanges are not "derivatives". The Scope Rule, however, provides that "derivatives trading facilities" are not exchanges for the purposes of this deeming provision.
These amendments will come into effect on April 30, 2015. If you have any questions please contact the authors of this bulletin or any other member of the BLG Derivatives Group.