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Modernizing OTC Derivatives Regulation in Canada

The document discusses the Canadian Securities Administrators' (CSA) efforts to modernize the regulatory oversight of over-the-counter (OTC) derivatives, including the introduction of a proposed instrument aimed at harmonizing data reporting and imposing business conduct requirements. This initiative, which has undergone multiple consultations since its initial presentation in 2017, seeks to align Canada's regulations with global standards and enhance market transparency and accountability. The proposed rules are designed to protect investors and reduce compliance costs while improving data quality for regulators and the public.

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17 views2 pages

Modernizing OTC Derivatives Regulation in Canada

The document discusses the Canadian Securities Administrators' (CSA) efforts to modernize the regulatory oversight of over-the-counter (OTC) derivatives, including the introduction of a proposed instrument aimed at harmonizing data reporting and imposing business conduct requirements. This initiative, which has undergone multiple consultations since its initial presentation in 2017, seeks to align Canada's regulations with global standards and enhance market transparency and accountability. The proposed rules are designed to protect investors and reduce compliance costs while improving data quality for regulators and the public.

Uploaded by

guptagarvita09
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Logbook 2 Assignment

In the Week 2 class of Canadian Securities, I came to know about various topics which comprises of
the financial instruments, derivates, managed and structured products, financial market
categorization, alternative trading market, purpose of regulation, regulatory model, gatekeeper role,
client focused reforms, conflict of interest, remediation, arbitration, ombudsman for banking
services and investment, ethical standards, unethical practices, prohibited sale practices, etc.

Among these topics, I like to talk about the financial market categorization under which I would like
to highlight modernizing of over-the-counter (OTC) derivatives.

Canadian Securities Administrators (CSA) modernizing Canada’s regulatory oversight of


over-the-counter (OTC) derivatives.

Why it is done: In order to regulate dealers and advisers in Canada in over-the-counter (OTC)
derivatives and to simplify and harmonies over-the-counter derivatives data reporting rules
worldwide, Canadian Securities Administrators (CSA) proposed amendment. The CSA released
its third draft of the proposed instrument and companion policy on January 20, 2022. Although
the Proposed Instrument was first presented in 2017, there have been two consultation
periods.

The proposed rule is one in a line of significant steps towards bringing Canada's regulation of
over-the-counter derivatives into line with global norms. Subject to a number of significant
exemptions, this would impose business conduct requirements on Canadian and foreign people
who engage in the business of trading derivatives (Derivatives Dealers) or providing advice on
derivatives transactions (Derivatives Advisers) in Canadian provinces and territories
(jurisdictions). Additionally, the Proposed Instrument would make sure that Canada's OTC
derivatives market complies with the rules set out by the International Organisation of
Securities Commissions.

How it is going to benefit: Nowadays, derivatives are common financial product with a
significant impact on the Canadian and worldwide economy. The regulation was developed to
safeguard participants in the derivatives market by enhancing accountability, expanding
transparency, and encouraging ethical behavior by dealers and advisers in the OTC derivatives
market.

Moreover, the proposed new regime also includes important rules that are focused on
protecting investors, including as the fair dealing obligation, conflicts of interest, know-your-
client (KYC), pre-transaction appropriateness, and prohibition on tied selling. Additionally,
these changes should also make market participants' reporting systems less complicated, lower
continuing operating and compliance expenses, and improve the consistency and quality of the
data that is made accessible to regulators and the general public.

Links:https://www.dlapiper.com/en/insights/publications/2022/10/canadian-securities-regulators-
advance-derivatives-business-conduct-rules

https://www.osc.ca/en/news-events/news/canadian-securities-regulators-seek-input-proposed-business-
conduct-rules-derivatives-dealers-and

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