By: Courtney Burton
The Canadian Securities Administrators (CSA) recently issued CSA Notice 96-932, which introduces a unified exemption from specific derivatives data reporting requirements. This is facilitated through a coordinated local blanket order, referred to as Blanket Order 96-932. This analysis examines these developments at a high-level, with a particular focus on their impact on Alberta companies under Multilateral Instrument 96-101 (MI 96-101 or TR Rule).
Background on CSA Notice 96-932 and the Rationale for Temporary Relief
CSA Notice 96-932, published on October 31, 2024, was introduced in response to certain challenges associated with the derivatives data reporting requirements. The TR Rule required a reporting counterparty to report creation data relating to a derivative immediately following the transaction or as soon as practicable, and in no event later than the end of the business day following the transaction. Similarly, the rules required a reporting counterparty to report all life-cycle event data relating to a derivative by the end of the business day on which the life-cycle event occurs.
Recognizing the burden these requirements, among others, placed on reporting counterparties, the TR Rule was amended on July 25, 2024. These amendments (TR Amendments), are set to come into force on July 25, 2025. To provide end-users with relief from the existing reporting requirements and to allow them to adjust to the upcoming changes, the CSA introduced temporary exemptions through the Blanket Order 96-932.
Understanding Blanket Order 96-932
Blanket Order 96-932 is a temporary measure implemented by the CSA to provide end-users with exemptions from certain provisions in the TR Rule. The proposed exemptions in Blanket Order 96-932 include:
End-user reporting of creation data: This exemption allows a reporting counterparty that is not a qualified reporting counterparty to report creation data no later than the end of the second business day following the execution date of a transaction.
End-user reporting of life-cycle event data: This exemption allows a reporting counterparty that is not a qualified reporting counterparty to report life-cycle event data no later than the end of the second business day following the day on which the life-cycle event occurred.
End-user reporting of valuation data: This exemption exempts a reporting counterparty that is neither a derivatives dealer nor a recognized or exempt reporting clearing agency or reporting clearing house, from reporting valuation data.
End-user reporting of commodity derivatives: This exemption exempts a reporting counterparty that is a local counterparty and is not a qualified reporting counterparty, subject to certain conditions, from reporting commodity derivatives below a specified notional threshold. This exemption only applies in Ontario, Manitoba, and Québec.
End-user reporting of derivatives between affiliated entities: This exemption exempts a reporting counterparty from reporting a transaction where both parties to the transaction are not qualified reporting counterparties and are affiliated entities. This exemption only applies in Ontario and Manitoba.
Discussion on Jurisdictional Differences in End-User Reporting of Commodity Derivatives and Inter-Affiliate Trades
The exemption for end-user reporting of commodity derivatives allows a reporting counterparty that is a local counterparty and is not a qualified reporting counterparty, subject to certain conditions, to be exempted from reporting commodity derivatives below a specified notional threshold. This exemption is limited to Ontario, Manitoba, and Québec because MI 96-101 already provides for a substantively equivalent exclusion. This means that the regulatory framework for the provinces governed by MI 96-101 (like Alberta) already includes provisions that effectively provide the same relief as the exemption in the Blanket Order.
The exemption for end-user reporting of derivatives between affiliated entities allows a reporting counterparty to be exempted from reporting a transaction where both parties to the transaction are not qualified reporting counterparties and are affiliated entities. This exemption only applies in Ontario and Manitoba. The reason for this jurisdictional limitation lies in the existing regulatory frameworks in these provinces. Again, MI 99-101 and the Autorité des marchés financiers’ Blanket Order 2015-PDG-0089 already provide for a substantively equivalent exclusion in these jurisdictions.
Timelines and Implications
Blanket Order 96-932 is effective from October 31, 2024, and will cease to be effective on July 25, 2025, which is the date that the TR Amendments will come into force, unless extended by the CSA jurisdictions. This means that companies have a temporary relief period during which they can adjust to the new reporting requirements under the TR Amendments to the TR Rule. The temporary nature of Blanket Order 96-932 means that companies should already be preparing for the changes that will come into effect on July 25, 2025. In conclusion, Blanket Order 96-932 introduces important exemptions to the derivatives data reporting requirements under the TR Rule.
For further information regarding Blanket Order 96-932, please contact Courtney Burton, or anyone on the Blue Rock Law LLP Derivatives Risk Management Team.