On March 19, the Canadian Securities Administrators (CSA) published National Instrument 25-102 Designated Benchmarks and Benchmark Administrators (NI 25-102) for comment. The proposed regulatory framework is intended to mitigate the risks of manipulation, interruption and uncertainty in the use of benchmarks, such as the Canadian Dollar Offered Rate (CDOR) and the Canadian Overnight Repo Rate Average (CORRA). Proposed NI 25-102, if adopted, will regulate the benchmarks themselves, the companies that administer benchmarks, and certain firms that contribute to the calculation of the benchmarks. The instrument specifically provides for the designation of CDOR and CORRA, as well as their administrator Refinitiv Benchmarks Services (UK) Ltd. The CSA has indicated that it may seek to regulate other benchmarks and benchmark administrators under NI 25-102 if they become sufficiently important to Canadian markets, if CSA members become concerned about them, or if an administrator applies for designation.
The regime has been designed to be substantially equivalent to the European Union’s Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (EU BMR), so that designated Canadian benchmarks can be used by EU-regulated entities, such as financial institutions and investment funds, once the EU’s restrictions on third-country benchmarks come into force in January 2022. The comment period closes on June 12, 2019.