The Reporter provides a monthly summary of Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions. It does not address Canadian provincial financial services legislative and regulatory developments, although this information is tracked by BLG and can be provided on request. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.

August 2018

Institution

Published

Title and Brief Summary

Status

FINTRAC

August 21, 2018

Beneficial ownership requirements

This guidance has been updated to reflect FINTRAC's amended position that, once the beneficial ownership information is obtained, various reasonable measures may now be used to confirm the accuracy of beneficial ownership information.

Effective since May 1, 2018

OSFI [Federally Regulated Mortgage Insurers]

August 9, 2018

Guideline - Mortgage Insurer Capital Adequacy Test

The Mortgage Insurer Capital Adequacy Test (MICAT) guideline combines the January 1, 2017 advisory Capital Requirements for Federally Regulated Mortgage Insurers (Advisory) and the relevant portions of the guideline Minimum Capital Test for Federally Regulated Property and Casualty Insurance Companies (MCT Guideline) into a single document.

In addition, the guideline introduces credit risk capital charges resulting from the implementation of IFRS 16 in 2019 and includes updated credit risk factors for securitized assets that were previously part of Guideline B-5 — Asset Securitization.

When it comes into effect, the MICAT will replace the Advisory and the MCT Guideline as the framework for assessing the capital adequacy of mortgage insurance companies.

Property and Casualty insurance companies that are not mortgage insurers will continue to determine their regulatory capital requirements using the MCT Guideline.

Effective January 1, 2019

The Financial Conduct Authority (FCA)

August 7, 2018

Global Financial Innovation Network

The Financial Conduct Authority (FCA) has, in collaboration with 11 financial regulators and related organisations, announced the creation of the Global Financial Innovation Network (GFIN).

The consultation sets out the three main functions of the GFIN:

  • act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
  • provide a forum for joint policy work and discussions; and
  • provide firms with an environment in which to trial cross-border solutions.

The FCA is also seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritise activity.

Comments should be provided by October 14, 2018.

Financial Stability Board (FSB)

August 7, 2018

Incentives to centrally clear over-the-counter (OTC) derivatives

This consultative document from the FSB, the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) examines the effects of G20 financial regulatory reforms on the incentives to centrally clear over-the-counter (OTC) derivatives. The central clearing of standardised OTC derivatives is a pillar of the G20 Leaders’ commitments to reform OTC derivatives markets in response to the financial crisis.

Comments should be provided by September 7, 2018.

OSFI [Banks, Bank Holding Companies, Federally Regulated Trust and Loan Companies, Cooperative Retail Associations]

August 1, 2018

Proposed changes to the Leverage Requirements (LR) Guideline

The revisions will align the LR guideline with the upcoming modifications to Chapter 4 (Settlement and Counterparty Risk) and Chapter 7 (Securitization) of the Capital Adequacy Requirements (CAR) guideline.

The revisions incorporate the Standardized Approach to Counterparty Credit Risk (SA-CCR) for calculating derivatives exposures. The Standardized Approach will replace the Current Exposure Method for computing counterparty credit risk exposure amounts for derivatives. The new method will align with the planned implementation of SA-CCR under Chapter 4 of the CAR guideline in Q1 2019. The revisions also include changes to the treatment of securitized assets that meet the operational requirements for recognition of significant risk transfer (SRT) that align with the proposed revisions in Chapter 7 of the CAR guideline. OSFI has also aligned treatment of the credit conversion factors for off-balance sheet securitization exposures with those under the proposed revisions to Chapter 7 of the CAR guideline.

Comments should be provided by September 21, 2018.