OSFI Proposes Changes To Its Leverage Requirements Guideline

Proposed changes relate to counterparty credit risk exposure for derivatives and the treatment of securitized assets in Canada.

Canadian banks, federal credit unions, bank holding companies, federally regulated trust companies, federally regulated loan companies and cooperative retail associations (collectively, the institutions) are required by their respective Acts¹ to maintain adequate capital. The leverage requirements set out in OSFI's Leverage Requirements guideline (the LR guideline), together with the capital standards specified in the Capital Adequacy Requirements guideline (the CAR guideline), provide the framework within which OSFI assesses whether an institution maintains adequate capital pursuant to the Acts. In particular, the LR guideline sets out the framework for the leverage ratio for institutions, which provides an overall measure of the adequacy of an institution's capital and serves as a supplementary measure to the risk-based capital requirements