The Reporter provides a monthly summary of Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions. It does not address Canadian provincial financial services legislative and regulatory developments, although this information is tracked by BLG and can be provided on request. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.
November 2015
Institution | Published | Title and Brief Summary | Status |
OSFI [Applicable to insurance companies] |
Issued November 30, 2015 | Guideline A – Minimum Capital Test OSFI is publishing the Minimum Capital Test for property and casualty insurers that will be effective on January 1, 2016. The guideline expands on the existing provisions related to equity risk in relation to exposures to equity derivatives and hedging. In addition, insurance receivables from federally regulated insurers and approved reinsurers will be allowed in net assets available in the Branch Adequacy of Assets Test (BAAT), subject to conditions. |
In force January 1, 2016 |
OSFI [Applicable to insurance companies] |
Issued November 27, 2015 | Guideline – Minimum Continuing Capital and
Surplus Requirements OSFI is issuing the final version of its Minimum Continuing Capital and Surplus Requirements (MCCSR) guideline for life insurers and insurance holding companies. Key changes to the guideline include:
The scope of the MCCSR Guideline has been expanded. As a result, OSFI is amending its Guideline E-19, Own Risk and Solvency Assessment and Guideline A-4, Regulatory Capital and Internal Capital Targets and is repealing Guideline A-2, Capital Regime for Regulated Insurance Holding Companies and Non-Operating Life Companies. |
In force January 1, 2016 |
OSFI [Applicable to insurance companies] |
Issued November 27, 2015 | Ruling — Demutualization — Eligible
Policyholders The issue is whether, for the purpose of the Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations (the Regulations), a person who is an eligible policyholder on the eligibility date must hold the applicable policy past the eligibility date to permanently become an eligible policyholder. |
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BIS/Basel [Applicable to Banks] |
Published November 10, 2015 | Capital treatment for "simple, transparent and
comparable" securitisations — consultative
document This proposal builds on the revised capital standards issued by the Committee in December 2014. The Criteria for identifying simple, transparent and comparable securitisations (STC criteria) were published by the Basel Committee and the International Organization of Securities Commissions in July 2015. The July 2015 STC criteria noted that additional or more detailed criteria, such as those related to the credit risks of the underlying securitised assets, may be necessary based on specific needs and applications. Given that greater prescriptiveness is required for using the STC criteria in regulatory capital requirements, the Committee proposes to supplement the July 2015 STC criteria with additional criteria for the specific purpose of differentiating the capital treatment of STC from that of other securitisation transactions. Compliance with the expanded set of STC criteria provides additional confidence in the performance of the transactions. |
Comments should be provided no later than February 5, 2016 |
BIS/Basel [Applicable to Banks] |
Published November 9, 2015 | TLAC
Quantitative Impact Study (QIS) Report The TLAC Quantitative Impact Study (QIS) Report analyses the TLAC levels and shortfalls at global systemically important banks (G-SIBs) based on the FSB's November 2014 consultative version of the TLAC term sheet. The quantitative impact study is a critical component of the impact analysis of the TLAC regime. In particular, it provides the main data set that is the basis of the analysis Assessing the economic costs and benefits of TLAC implementation, which was led by staff of the Bank for International Settlements. The TLAC Quantitative Impact Study also examines the extent that G-SIBs and non-G-SIBs currently invest in TLAC instruments, which helps to inform the prudential treatment of TLAC holdings. |
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BIS/Basel [Applicable to Banks] |
Published November 9, 2015 | TLAC
Holdings consultative document The Basel Committee's TLAC Holdings consultative document sets out its proposed prudential treatment of banks' investments in TLAC. It is applicable to all banks subject to the Basel Committee's standards, including both G-SIBs and non-G-SIBs. The proposed treatment is for banks to deduct from their regulatory capital their holdings of TLAC instruments, subject to thresholds. It also addresses the treatment of holdings of instruments that rank pari passu to TLAC in the creditor hierarchy. The objective of the proposed treatment is to support the TLAC regime by reducing the risk of contagion if a G-SIB should enter resolution. The TLAC regime also necessitates changes to Basel III to specify how G-SIBs must take account of the TLAC requirement when calculating their regulatory capital buffers. |
Comments should be provided no later than February 12, 2016 |
BIS/Basel [Applicable to Banks] |
Published November 5, 2015 | Haircut floors for non-centrally cleared securities
financing transactions — consultative document The Basel Committee on Banking Supervision has issued for public consultation a proposal for incorporating the FSB's policy framework for haircut floors for non-centrally cleared SFTs into the Basel III framework. This proposal is based on the FSB's report on Strengthening Oversight and Regulation of Shadow Banking - Regulatory framework for haircuts on non-centrally cleared securities financing transactions published in October 2014, which recommended that its policy framework for haircut floors for non-centrally cleared SFTs be incorporated into the Basel III framework by the end of 2015. The objective of this proposal is to create incentives for banks to set their collateral haircuts above the floors rather than hold more capital. |
Comments should be provided no later than January 5, 2016 |
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