Thinking At The Margin: Canadian Provincial Regulators Issue Margin Proposals For Non-Cleared Derivatives

Regulators of many financial institutions, federally in Canada and internationally, have established rules requiring margin to be exchanged in connection with derivatives that are not cleared through a central counterparty. For example, in Canada, federally-regulated financial institutions (FRFIs) are subject to the margin requirements for uncleared derivatives in Guideline E-22 published by the Canadian Office of the Superintendent of Financial Institutions (OSFI) in February 2016, which is discussed in our March 2016 Blakes Bulletin: Margin Requirements for Non-Centrally Cleared Derivatives Issued in Canada. A parallel set of margin requirements is being proposed by the Canadian Securities Administrators' (CSA) Derivatives Committee (Consultation Paper 95-401 – Margin and Collateral Requirements for Non-Centrally Cleared Derivatives (CSA Proposal)). However, as a result of substituted compliance, the CSA Proposal is expected to apply to a narrow subset of