Canadian Rewrite – Changes Coming to Canadian Trade Reporting
The long-awaited rewrite to the Canadian trade reporting rules has now been finalized and published by the Canadian Securities Administrators (CSA). This rewrite was very much expected by the industry and has been discussed in industry working groups, so there should be no surprises with the content or the timing. The implementation date is scheduled for one year from now on July 25, 2025.
There are several key changes for reporting firms to be aware of and as the technical specifications get finalized, Cappitech will provide a more detailed report outlining the technical changes required.
Reporting Deadline:
- Non dealer reporting-moving to T+2 for creation and lifecycle data in line with CFTC requirements and reducing the burden on end user firms. Non-financial counterparties in Canada and the U.S. have long pushed back on the notion that they should not have the same timeliness requirements as the largest financial institutions.
Exclusion:
- Commodity derivatives exclusion under 40.(1) local counterparty is not a qualified reporting counterparty and the aggregate month-end gross notional amount under all outstanding commodity derivatives of the local counterparty, did not, in any calendar month in the preceding 12 calendar months, exceed $250 000 000.
Harmonization:
- Harmonization of local party definitions across the various Canadian provinces and territories
- UTI harmonization with global standards
- Data element harmonization
- Derivatives dealers to report valuation, collateral and margin data
- UPI requirement for all asset classes. CFTC does not require UPI for Commodities yet so there is a regulatory divergence happening between ESMA, FCA, CSA (who require UPIs for all asset classes) and the CFTC which does not yet. Will this now get addressed?
- ISO 20022 NOT included, will come into effect at some point in the future AFTER CFTC’s implementation. This means there will likely be another rewrite for CFTC and CSA in 2026 to introduce ISO 20022.
Verification:
- Verification requirements for derivative dealers and clearing agencies only. This is following a similar path to what the CFTC and ESMA have instituted by requiring firms to verify the data they have reported is accurate. If they find a significant error, they are required to notify the regulator themselves.
- Notional amount derivatives dealers every quarter
- Derivatives dealers every 30 days
- There is a new requirement putting the responsibility on the non-reporting counterparty (as long as they are deemed a local counterparty,) to verify the data from the counterparty is accurate.
- A local counterparty, other than the reporting counterparty, must notify the reporting counterparty of an error or omission as soon as practicable after discovery of the error or omission, and no later than the end of the business day following the day of discovery of the error or omission.
- A reporting counterparty must notify the Commission of a significant error or omission with respect to derivatives data as soon as practicable after discovery of the error or omission.
Position Reporting:
- Section 33.1 allows for position-level reporting in two cases: 1. derivatives that are commonly referred to as “contracts for difference”, where each derivative included in the reported position is fungible with all other derivatives in the reported position and has no fixed expiration date; 2. derivatives for which the only underlying interest is a commodity other than cash or currency, where each derivative included in the reported position is fungible with all other derivatives in the reported position.
Porting:
- Introduction of porting guidance. Much like the CFTC added in specific guidance on how porting (transferring reporting from one Trade Repository to another) would work, the Canadian regulators have also outlined the process.
Our team at Cappitech is reviewing the final rules and will provide additional insight and analysis over the coming weeks. If your organization needs assistance in interpreting, analyzing or preparing for these changes, our Consulting Services can assist. Please reach out to your Account Manager or contact us at regreporting@spglobal.com for additional information.
