Margin Requirements For Non-Centrally Cleared Derivatives Issued In Canada

The Office of the Superintendent of Financial Institutions (OSFI), Canada's federal regulator of financial institutions, recently issued Guideline E-22 – Margin Requirements for Non-Centrally Cleared Derivatives (Guideline). The Guideline requires the mandatory exchange of margin for non-centrally cleared derivatives transactions (NCCDs). A draft of the Guideline was published by OSFI on October 19, 2015, and the final Guideline reflects many of the comments submitted during the comment period. Blakes represented the International Swaps and Derivatives Association, Inc. in commenting on the draft Guideline.

The Guideline requires the exchange of margin for NCCDs between "Covered Entities" where at least one of the parties to the NCCD is a federally-regulated financial institution (FRFIs). The Guideline is based on the margin framework for NCCDs established by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities