Canada: Canadian Securities Administrators Proposes Mandatory Reporting Of OTC Derivatives Trades

On June 23, 2011, the Canadian Securities Administrators released CSA Consultation Paper 91-402, the first in a series of eight proposed public consultation papers relating to the proposed sweeping regulatory reform of the Canadian over-the-counter (OTC) derivatives market. It is widely believed that lack of market data and transparency in the global OTC derivatives markets severely exacerbated the recent global financial crisis; accordingly, the CSA has focused initially on proposals to require reporting of OTC derivatives transactions to approved trade repositories. In this manner, the CSA contemplates that information will be made available to regulators and, in some cases, the public, to mitigate systemic risk and promote financial stability in the financial system.

What Must Be Reported

The CSA proposes that all OTC derivative transactions, however transacted (including newly executed derivatives and post-execution events such as full or partial novations or unwinds, as well as certain transactions existing when the reporting requirement comes into effect), would be required to be reported to a trade repository that is established and approved under the framework proposed by the CSA. The following data must be reported for transactions executed after the reporting requirement is implemented:

  • Creation data: the principal economic terms of the transaction (including the counterparties, the type of transaction, underlying reference, notional amounts, price, execution and termination date), as well as executed legal documentation (i.e., the confirmation).
  • Continuation data: data that reflect changes in contract terms or counterparty positions. Life cycle data must be reported in respect of credit derivatives and some types of equity derivatives, and snapshot data must be reported for all other types of derivatives, including interest rate, commodity and currency derivatives. "Life cycle data" refers to data necessary to fully report any event that would result in a change to previously reported data, including to report scheduled or anticipated events occurring during the life time of a derivative that do not result in a change to the contractual terms. "Snapshot data" refers to data elements necessary to provide a snapshot view on a daily basis of all the principal economic terms of the derivative, including any changes from the previous day.
  • Valuation data: daily updated market values of transactions and positions (including mark-to-market values, collateral and margin values).

The CSA contemplates that, other than for block trades, real-time reporting will be required, subject to market participants being able to adopt the required technology to facilitate this. Subject to further study in this regard, the CSA is recommending that reports be submitted by the end of business on the next working day after a transaction is executed unless and until real-time reporting is implemented.

In the case of block trades, the CSA recognizes that real-time reporting runs the potential danger of allowing market participants to determine the identity of the counterparties to a trade; this, in turn, could make hedging the risks of a large transaction more difficult and expensive as market participants anticipate the parties' hedging requirements and adjust pricing accordingly. Subject to determining an appropriate threshold to define a block trade, the CSA will permit delayed reporting to preserve the anonymity of the counterparties.

The CSA proposes that OTC derivatives transactions already existing on the date the mandatory reporting rule is implemented (other than those terminating or expiring within one year thereafter) be reported within 180 days of that date. The information to be reported would include the principal economic terms, including the date of the transaction and the identity of the parties, but not the actual trade confirmations.

Canadian participants in the OTC derivatives market who transact in the U.S. market will be subject to similar requirements, both in terms of reporting content and timing, with respect to those transactions under rules currently being developed by U.S. regulators.

Who Must Report

The CSA proposes that one counterparty to each OTC derivative transaction must report; generally parties who are "financial intermediaries" (a term to be defined by the CSA in an upcoming consultation paper focused on registration) will bear this responsibility. In practice, if both parties to a trade are financial intermediaries, the parties could choose which one will report; similarly, if neither party to the transaction is a financial intermediary (i.e., both are end-users) the parties could choose which party will report. The CSA will permit delegation to a third party in certain circumstances, including to a recognized central counterparty clearing house for centrally cleared transactions. Records for all transactions must be maintained by counterparties for seven years from the date on which the transaction expires or terminates.

Public Availability of Reported Information

The CSA proposes that trade repositories will periodically publicize aggregate transaction data on positions, transaction volumes and average prices, with additional subset breakdowns that could include, for example, data by market characteristics or trading venue. It is not proposed, however, that this information will identify counterparties to specific transactions or their positions. A market participant will be prohibited from accessing a trade repository's data unless originally submitted by that participant or the participant is the non-reporting counterparty to a submitted trade.

The CSA is proposing, however, to make anonymous post-trade transaction-level data available to the public. Again, this will not include the identity of counterparties to transactions or the positions of market participants.

The CSA is seeking comments on the Consultation Paper by September 12, 2011. The Consultation Paper can be accessed here.

Torys has offices in Toronto, New York and Calgary

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.