On December 21, 2016, the Office of the Superintendent of Financial Institutions Canada ("OSFI") released for comment its draft Guideline E-23 Enterprise-Wide Model Risk Management Guideline (the "draft Guideline").

The draft Guideline aims to establish a common standard for federally regulated deposit-taking institutions to establish sound practices for an enterprise-wide and principles-based model risk management framework. It outlines prudent practices for internal model development, review, approval, use and modification and is applicable to all models that have a material impact on the risk profile of an institution.

Importantly, the draft Guideline distinguishes between OSFI's expectations for those institutions that are approved to use internal models for regulatory capital purposes and other institutions that use standardized models. This way, the applicability of the draft Guideline will be commensurate with the nature, size, complexity and risk profile of the institution.

The draft Guideline applies to banks, bank holding companies, foreign bank branches, federally regulated trust and loan companies and cooperative retail associations and is scheduled to come into force in November 2017.

Stakeholders are invited to submit written comments to OSFI by February 28, 2017. We would be pleased to assist you in making a submission. Please do not hesitate to call or write any of the authors in this connection.