On January 27, 2022 the Canadian Securities Administrators (CSA) announced that they are adopting Amendments to National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives and Changes to Companion Policy 94-101 Mandatory Central Counterparty Clearing of Derivatives (the Amendments).
NI 94-101, which came into force in 2017, requires that certain market participants clear prescribed over-the-counter derivatives through a central clearing counterparty, subject to exemptions, in order to reduce counterparty risk. The Amendments are in response to feedback received by the CSA and are intended to refine the scope of market participants that are subject to the clearing requirements and reduce regulatory burden. The CSA had published proposed amendments to NI 94-101 back in September 2020 (the 2020 Proposed Amendments) and the current Amendments differ from those 2020 Proposed Amendments in a few ways. These differences include the new transition period (see coming into force date below), removal of a requirement relating to affiliates having to enter into an agreement to rely on the intragroup exemption that was considered an unnecessary burden, and additional guidance on the CSA’s expectations regarding the multilateral portfolio compression exemption. Amendments were also made to Appendix B Laws, Regulations or Instruments of Foreign Jurisdictions Applicable for Substituted Compliance (Appendix B) that now includes the relevant laws and regulations of the United Kingdom to reflect Brexit.
Provided that all necessary approvals are obtained, the Amendments will come into force on September 1, 2022, except for Appendix B which will come into force earlier on April 12, 2022.