OTTAWA ─ February 29, 2016 ─ Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions (OSFI) today released a final version of Guideline E-22 Margin Requirements for Non-Centrally Cleared Derivatives. This Guideline establishes minimum standards for margin requirements for non-centrally cleared derivative transactions undertaken by federally regulated financial institutions (FRFIs). This guidance aims to mitigate systemic risk in the financial sector and promote central clearing of derivatives where practicable.
In March 2015, the Basel Committee on Banking Supervision (BCBS) and the Board of the International Organization of Securities Commissions (IOSCO) issued a framework on Margin requirements for non-centrally cleared derivatives, which will come into effect on September 1, 2016. OSFI’s Guideline is based on this international framework, and supports the policy’s financial stability objectives while recognizing Canada’s place in the global market. The Guideline considers the size, nature and complexity of FRFIs, specifically small and medium-sized institutions with non-material exposure.
- The Guideline is effective September 1, 2016, consistent with the timing of the BCBS-IOSCO framework and applies to all FRFIs where they meet the definition of a covered entity.
- The Guideline requires the exchange of margin on non-centrally cleared derivative transactions between covered entities.
- The Guideline incorporates several revisions resulting from comments received during the public consultation process, which began in October 2015.
- A summary of material comments received from industry stakeholders and an explanation of how they have been addressed is available in a table attached to the cover letter.
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.
OSFI – Public Affairs