The Canadian Securities Administrators (CSA) have published final amendments aimed at streamlining and harmonizing over-the-counter (OTC) derivatives data reporting with global standards.
These amendments are expected to significantly reduce the complexity of market participants' reporting systems, decrease operational and compliance costs, and enhance the consistency and quality of data available to regulators and the public.
After considering feedback on the proposed amendments published in June 2022, the CSA finalized these changes to align Canadian data reporting requirements with international standards. Stan Magidson, CSA chair and chair and CEO of the Alberta Securities Commission, highlighted the significance of these changes, "The changes to derivatives reporting standards represent a significant milestone for market participants in Canada. By harmonizing Canadian data reporting requirements with international standards, the CSA is reducing regulatory burden and increasing market efficiency. The resulting improvements to data quality and consistency will enable us to more effectively identify risks and vulnerabilities in our derivatives markets and strengthen protections for derivatives market participants."
The finalized amendments include the introduction of a harmonized CSA Derivatives Data Technical Manual, which aims to provide clarity and consistency regarding the format and values for reporting harmonized data elements. These data elements are now aligned with international standards developed by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
Other key updates in the amendments include updated requirements for trade repository governance, operations, and risk management to align with international standards. The amendments also enhance data accuracy and consistency through data validation and verification measures similar to those employed by other global regulators. Additionally, the amendments introduce greater harmonization within the CSA, such as a harmonized threshold in the commodity derivatives exclusion for non-dealers. The amendments extend end-user reporting deadlines and offer optional position-level data reporting for certain derivatives. They also modify reporting requirements for derivatives executed anonymously on trading facilities such as swap execution facilities.
The amendments will take effect on July 25, 2025. The CSA also reminds all Canadian market participants transacting OTC derivatives to renew their legal entity identifier (LEI). Failure to renew the LEI will result in non-compliance with securities law.