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Canada: The Ontario Securities Commission Releases Amendments To OSC Rule 91-507 Trade Repositories And Derivatives Data Reporting To Delay Effective Date Of Trade Reporting Obligations
Just over four months after the coming into force of OSC Rule
91-507 Trade Repositories and Derivatives Data Reporting (the
Trade Reporting Rule), the Ontario Securities
Commission (the Commission) has released
amendments to the Trade Reporting Rule that will delay the
effective date of the reporting obligations for all counterparties
and remove the "fall-back" reporting mechanism that
required Ontario non-dealer counterparties to monitor the
transaction reporting of a foreign dealer reporting counterparty.
These amendments, if approved by the Minister of Finance, come into
force July 2, 2014.
As part of ongoing Canadian and international over-the-counter
(OTC) derivatives reform, the Commission enacted
the Trade Reporting Rule on December 31, 2013 in order to regulate
and oversee trade repositories and mandate derivatives data
reporting requirements by counterparties to derivatives
transactions. At the same time, the Commission also enacted OSC
Rule 91-506 Derivatives: Product Determination, the purpose of
which is to define the types of derivatives that will be subject to
reporting requirements under the Trade Reporting Rule (and to other
relevant Commission rules governing derivatives once such rules are
enacted).
As we previously reported in a notice on April 11, 2014, the
Canadian Securities Administrators announced that derivative trade
reporting would be delayed to allow time for a trade repository to
be recognized under the Trade Reporting Rule. On April 17, 2014,
the Commission released amendments to the Trade Reporting Rule (the
Amendments) designed to put these reporting delays
into effect. As a result of the Amendments, derivatives dealers and
recognized or exempt clearing agencies will have to report
prescribed data for derivatives transactions starting October 31,
2014. All other reporting counterparties will now have to start
reporting on June 30, 2015. These delays are necessitated by the
fact that no trade depository will be in a position to be
designated within the original trade reporting time frame (July 2,
2014 for derivatives dealers and recognized or exempt clearing
agencies and September 30, 2014 for all other reporting
counterparties). In light of these changes to the reporting
obligation dates, corresponding changes are also made by the
Amendments to the reporting dates of pre-existing derivative
transactions.
The Trade Reporting Rule has also become less burdensome to
local counterparties, as the Amendments repeal the
"fall-back" reporting mechanism that required Ontario
non-dealer counterparties to monitor the transaction reporting of a
foreign dealer reporting counterparty. This mechanism required that
a local counterparty act as a reporting counterparty and fulfill
the reporting counterparty duties under the Trade Reporting Rule
where a foreign dealer reporting counterparty did not report a
transaction or otherwise failed to fulfill its reporting
obligations. The revocation of the "fall-back" reporting
mechanism was prompted by significant resource and technological
difficulties faced by a number of Ontario non-dealer counterparties
in having to develop systems to monitor their counterparties'
reporting.
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