On June 1st, 2014, IIROC released a code of conduct for the
Canadian Dollar Offered Rate ("CDOR"). A copy of the Code
can be accessed here. The
Code lays out new standards for how banks submit CDOR, internal
supervision of the rates and record keeping. In confirming
that all CDOR panel members must now be only banks as opposed to
investment dealers, it also clarified that the CDOR acronym stands
for "Canadian Dollar Offered Rate" and not "Canadian
Dealer Offered Rate". This is significant as it means that
IIROC should have no supervisory role over CDOR in future.
CDOR's purpose is to establish a daily benchmark reference
rate for Bankers Acceptance borrowings and is also used to form the
floating benchmark rate for Canadian dollar derivatives including,
interest rate swaps, floating rate notes and as the final
settlement price for future contracts. Every business day before
10:15 a.m., each Bank submits a bid which represents the rate at
which the Bank would be willing to lend funds against Primary
Bankers Acceptances Market issuances to clients. CDOR is then
calculated by taking the average of these Bids after removing the
highest and lowest submissions.
The Code was developed by Canadian Submitting Banks in
consultation with IIROC and the Bank of Canada. It serves as a part
of a response to recent reviews of CDOR supervisory practices
conducted by IIROC and the Board of International Organization of
A few days before the Code was released, on May 30, 2014, the
Office of the Superintendent of Financial Institutions
("OSFI") announced that it was proposing to make senior
management of the Submitting Banks responsible for developing new
guidelines for submissions to CDOR. The OSFI proposal can be accessed here.
These recent developments and the growing interest in CDOR are
inextricably tied to U.K. and U.S. regulatory investigations and
prosecutions of the benchmark, LIBOR, however, OSFI has noted that
there have been no similar reports of CDOR manipulation in Canada,
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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