Sounding Out The Market: OSFI Publishes Draft Guideline B-7 Derivatives Sound Practices For Comment

On January 24, 2013, the Office of the Superintendent of Financial Institutions ("OSFI") issued a letter highlighting OSFI's progress in implementing the G-20 reforms for over-the-counter ("OTC") derivatives markets.¹ This letter stated that OSFI intended to revise the Derivatives Best Practice Guideline (B-7) (the "1995 Guideline") before the end of 2013 to reflect the commitments made by the Canadian government to the G-20 regarding issues such as central clearing principles and counterparty risk management.²

Although 2013 ended without any revisions to the 1995 Guideline, on October 1, 2014 OSFI published a revised draft guideline for comment reflecting Canada's G-20 commitments and setting out OSFI's approach to regulating the OTC derivatives activities of Canadian federally regulated financial institutions ("FRFIs").³ The draft guideline is titled "Guideline B-7 Derivatives Sound Practices" (the "Proposed Guideline") to underscore that the practices set