On August 23, the Canadian Securities Administrators (CSA) published two notices outlining staff’s views about the securities law implications for Canada’s implementation of the bail-in debt regime for domestically, systemically important banks (D-SIBs). Under Canada’s new bail-in debt regime, which comes into force on September 23, 2018 the Office of the Superintendent of Financial Institutions (OSFI) may turn control over a D-SIB to the Canada Deposit Insurance Corporation (CDIC) if OSFI concludes that the D-SIB is no longer viable. The CDIC will have the authority to convert some or all of the D-SIB’s debt (D-SIB Bail-in Debt) into common shares to recapitalize the bank. Subject to certain exclusions, DSIB Bail-in Debt generally includes all unsubordinated unsecured debt of a D-SIB that is tradeable and transferable with an original term to maturity of over 400 days.

CSA Staff Notice 46-309 Bail-in Debt states, among other things, that, subject to certain exemptions, the trading or distribution of bail-in debt by persons or companies in the business of trading in securities to investors located in Canada must be done through a registered dealer and in accordance with National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Requirements (NI 31- 103). CSA Staff Notice 81-331 Investment Funds Investing in Bail-in Debt clarifies that D-SIB Bail-in Debt is an eligible investment for a money market fund only if such debt continues to meet the prescribed eligibility requirements applicable to money market funds. Investment fund managers also are expect to fully understand and take into consideration key features and risks of any D-SIB Bail-in Debt that they hold.