Canadian Regulator Seeks Comment on Proposed Over the Counter Derivatives Exemptions

The Canadian Securities Administrators (CSA) published for comment CSA Consultation Paper 91-405 - Derivatives: End-User Exemption. The Consultation Paper, which is part of a series of proposals designed to improve the regulatory oversight of over-the-counter (OTC) derivatives in Canada, sets out the CSA Derivatives Committee’s recommendations for an exemption from specific requirements being developed to regulate over-the-counter (OTC) derivatives. This end-user exemption would be available to qualifying businesses that use OTC derivatives as a risk management tool. 

The paper sets out the Committee’s position on the application of the proposed end-user exemption such as what criteria would be required to qualify, what criteria were considered but excluded, and what a qualifying end-user would need to do to rely on the proposed exemption. 

“The CSA’s commitment to establish a comprehensive framework for OTC derivatives regulation must balance the need to meet international commitments with the needs of individual market participants in Canada,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission. “The proposed end-user exemption would permit a business that uses OTC derivatives to manage its own business risks to continue to use these products in a cost effective manner, without increasing risk to the overall market.”