On July 3, Quebec’s Autorité des marchés financiers (AMF) published for comment the Draft Regulation to amend Regulation 91-507 respecting Trade Repositories and Derivatives Data Reporting(the “Draft Regulation”). Regulation 91-507, which requires that all over-the-counter (OTC) derivatives transactions involving a local counterparty be reported to a recognized trade repository, came into force in Quebec on December 31, 2013, with reporting obligations becoming effective for the various market participants over the course of 2014 and 2015. The AMF is proposing the Draft Regulation in furtherance of its previously stated intent to make consequential amendments to Regulation 91-507 “to maintain a harmonized national oversight and reporting regime for OTC derivatives markets”.
As part of the changes proposed in the Draft Regulation, section 25 of Regulation 91-507, which imposes the reporting requirement on the dealer, would be amended to explicitly add Canadian financial institutions to the determination of the reporting counterparty. The reason for the addition is that Canadian financial institutions engaging in derivatives trading on their own behalf might not need to be registered as derivatives dealers under the Quebec Derivatives Act. For purposes of transaction reporting under Regulation 91-507, a Canadian financial institution would be the most technologically sophisticated counterparty.
The Draft Regulation is not, however, intended to cover the implementation in Quebec of the International Swaps and Derivatives Association (ISDA) Canadian methodology to determine the reporting counterparty for a transaction. (The ISDA methodology was recently introduced in Ontario through amendments to OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting that permit parties to agree to sign up to it for purposes of reporting counterparty determination.)
The amended Regulation 91-507 would also match the terms of the AMF blanket exemption decision published on May 15 by extending the date for the commencement of OTC derivatives trade reporting obligations under Regulation 91-507 to October 31, 2014 for dealers, clearing agencies and Canadian financial institutions, and to June 30, 2015 for all other OTC derivatives market participants. In addition, the requirement for trade repositories to make transaction level data available to the public would be delayed to April 30, 2015.
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