A parallel set of margin requirements is being proposed by the Canadian Securities Administrators’ (CSA) Derivatives Committee (Consultation Paper 95-401 – Margin and Collateral Requirements for Non-Centrally Cleared Derivatives (CSA Proposal)). However, as a result of substituted compliance, the CSA Proposal is expected to apply to a narrow subset of derivatives transactions involving Canadian local counterparties. For example, the CSA Proposal will not be relevant to derivatives transactions where either or both of the counterparties are a Canadian bank or other FRFI. Similarly, in cases where foreign margin requirements apply to the foreign counterparty of a Canadian person and are recognized as meeting the applicable Basel Committee on Banking Supervision and the International Organization of Securities Commissions standards (BCBS-IOSCO Standards) and result in a similar outcome to the CSA Proposal, the Canadian person may comply with such foreign margin requirements in lieu of compliance with the CSA Proposal.

As a result, the CSA Proposal should only impact a limited subset of uncleared derivatives transactions between the following types of financial entities (where at least one of them is a Canadian local counterparty)...