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    CSA Rewrite: Harmonisation or Carving its Own Path?

    Published: January 23, 2025

    The Canadian Securities Administrators (CSA) have unveiled final amendments aimed at streamlining over-the-counter derivatives and aligning them with global data reporting standards. Proposed amendments were unveiled June 2022 and following a consultation period with Regulatory and Industry bodies, these have been reviewed and finalised in July 2024 and are set to take effect July 2025.

    Some aspects of the amendments, such as alignment with other reporting regime formats and rules, including the US Commodities Futures Trading Commission (CFTC) Rewrite, are promising, potentially reducing regulatory challenges. The amendments are expected to reduce the complexity of market participants’ reporting systems and decrease ongoing operational and compliance costs, while improving the consistency and quality of the data available to regulators and the public.

    In addition, CSA have introduced some updates specific to the Canadian regime which we explore in further detail below.

    The Story so far

    Let’s consider the changes..

    The CSA’s final amendments introduce a range of significant updates:

    • The amendments include a streamlined process that allows a reporting counterparty to transfer responsibilities to an alternate designated trade repository.
    • Reporting requirements have been revised, particularly for derivatives executed anonymously on trading platforms, such as swap execution facilities.
    • An option has been introduced for certain derivatives to report at the position level, offering more flexibility in reporting requirements.
    • Extended reporting deadlines have been granted for end-users, providing additional time to comply with the regulations.
    • The amendments emphasise enhanced data accuracy and consistency, incorporating rigorous validation and verification processes, similar to those implemented by other international regulators.
    • Greater harmonisation within the CSA has been achieved, including a unified threshold for the commodity derivatives exclusion applicable to non-dealers.
    • Updates to the governance, operations and risk management standards for trade repositories have been made, ensuring alignment with international best practices.

    While the CSA had initially proposed four distinct draft technical manuals for each of the Trade Reporting (TR) Rules, they have instead published a single technical manual across the CSA to reduce regulatory burden and promote consistent reporting under the updated rules.

    The CSA Derivatives Data Technical Manual includes updated data elements which align with international standards developed by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).

    Several significant changes have been introduced to enhance market oversight, improve data quality, and align with other global transaction reporting regimes:

    Substituted Compliance

    The amendments now permit substituted compliance, allowing market participants to fulfill their CSA obligations by adhering to equivalent foreign regulations, such as those in the EU.

    Impact: This approach minimises the duplication of reporting efforts for international participants, fostering alignment between Canadian regulations and global standards.

    Public Dissemination

    The timing and conditions for public dissemination have been refined, with a focus on maintaining the anonymity of counterparties and reducing potential market impact.

    Impact: These adjustments strike a balance between transparency and the protection of market participants, ensuring the integrity of the market is upheld.

    Data Standardisation and Quality Control

    The amendments introduce rigorous data quality standards and mandate the use of standardised reporting formats, ensuring the accuracy and consistency of data submitted to trade repositories.

    Impact: The improved data quality and standardisation facilitate more effective analysis by regulators, enhancing market oversight and risk management capabilities.

    Cross-Border Data Sharing

    Provisions for cross-border data sharing have been incorporated, enabling greater collaboration between Canadian regulators and their international counterparts.

    Impact: This increased cooperation on a global scale strengthens market oversight and aids in the identification and mitigation of systemic risks in the derivatives markets.

    Key Divergences/CSA Specific Amendments

    Let’s take a closer look at some areas where the CSA has departed from the other global regimes or created bespoke guidance for data reporting standards:

    (Click for more information)

    A flexible, domestic hierarchy has been introduced for assigning and reporting the UTI.

    This will improve efficiency in the generation and reporting of this identifier.

    The CSA has introduced the Unique Product Identifier (UPI) for all asset classes. The US CFTC does not require UPI for Commodities yet, so there is a regulatory divergence happening between the European Securities and Markets Authority (ESMA), UK Financial Conduct Authority (FCA), CSA and the CFTC.

    The CSA has aligned with international standards by incorporating key data elements like UTI and UPI, while excluding excess collateral elements not required by the CFTC. The number of bespoke Canadian-specific data elements has been limited to five.

    Derivatives involving a local counterparty are required to be reported under the TR Rules. The definition of “local counterparty” has been harmonised across TR Rules, as requested by market participants.

    Extended reporting deadlines for non-dealers, along with a harmonised concept, align the scope of the inter-affiliate exemption across the TR Rules and reduce regulatory burdens.

    A new reporting hierarchy replaces the existing one, differentiating between financial and non-financial derivatives dealers, which will result in a substantially harmonised reporting hierarchy.

    Unlike CFTC rules, the CSA does not require quarterly verification or a seven-day error correction limit. Instead, errors must be reported to the Regulator by the end of the next business day following discovery.

    While collateral and margin data must be reported in respect of each derivative, the data may be reported on either a derivative or portfolio basis, at the option of the reporting counterparty.

    The CSA allows optional position-level reporting to reduce regulatory burden.

    They are further extending this option to commodity derivatives that also meet the criteria for position level data.

    The CSA are proposing a new concept in that the Clearing Agency has the obligation to report the termination of the original alpha trade even if they didn’t report the trade initially.

    In light of the potential sequencing issue, the CSA have extended the timing for the clearing agency to report the termination of original derivatives by an additional day.

    Whilst the requirement to correct errors in trades that are no longer open is analogous to requirements in the revised CFTC rules, the CSA rules differ in terms of record retention and local counterparty rules.

    The Trade Reporting Amendments require derivatives trading facilities to report anonymous derivatives that are intended to be cleared. However, the CSA have tailored the data elements that they are required to report and have provided additional time to determine whether a participant, or its customer, is a local counterparty.

    The CSA has adopted a single implementation date for the updated data elements and UPI implementation. Since ISO 20022 has only recently been finalised, they intend to implement this separately in the future following the CFTC.

    Facing challenges?
    Let First Derivative Lead the Way

    In the dynamic regulatory environment, particularly as the CSA transition period progresses before the new regulations take full effect, staying ahead of remediation challenges is critical. Our expert consultants are here to help you navigate these changes, offering guidance on interpreting regulations, implementing necessary updates, and providing ongoing support.

    For more details on how these amendments may impact your operations or to discuss the latest trade reporting requirements, connect with the First Derivative Team.

    Through our strategic partnerships with leading regulatory reporting technology solutions and top RegTech providers, we can streamline your compliance processes.

    Start your regulatory journey with confidence. Contact First Derivative today for assistance with the CSA transition and beyond!

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    Shauna McParland

    Shauna McParland
    Managing Consultant, First Derivative – Regulatory Solutions
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    Jamie Lavery

    Jamie Lavery
    Managing Consultant, First Derivative – Regulatory Solutions
    First Derivative LinkedIn profile


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