On March 30, 2017, the International Swaps and Derivatives Association, Inc. (ISDA), with the assistance of Blakes lawyers, published the ISDA Canadian Clearing Classification Letter. The letter enables market participants to provide their counterparties with status information to determine if they are in scope for purposes of National Instrument 94-101 – Mandatory Central Counterparty Clearing of Derivatives (NI 94-101).
The letter is available on the ISDA website in both English and French.
NI 94-101 was published by the Canadian Securities Administrators (CSA) on January 19, 2017 and requires certain over-the-counter derivatives entered into by Canadian local counterparties to be submitted for clearing to a recognized or exempt clearing agency. The clearing mandate will apply if at least one party to the derivative transaction meets certain criteria listed in NI 94-101. For more information on NI 94-101, see our January 2017 Blakes Bulletin: Canadian Regulators Finalize Mandatory OTC Derivatives Clearing Rules.
Under NI 94-101, there is no requirement for market participants to exchange classification information with all of their counterparties. Rather, the CSA expect local counterparties to solicit confirmation from its counterparty where there is reasonable basis to believe that the counterparty may fall under the requirements of NI 94-101. This letter will allow market participants to confirm with their counterparties key information that will establish whether they are in scope of NI 94-101 and must submit derivatives for clearing.