Following a decade-long consultation process, the Canadian Securities Administrators (CSA) has published a key regulation impacting dealing and advising in over-the-counter derivatives. Multilateral Instrument 93-101 – Derivatives: Business Conduct (the Rule) is expected to come into effect in September 2024.
The Rule is set to have a significant impact on derivatives business conduct and will likely reshape the compliance landscape for corporations engaged in derivatives trading in Canada. Its issuance marks the culmination of a 10-year consultation process by the CSA.
The specifics of the Rule, however, least to date, remain largely undisclosed, leaving a measure of uncertainty for international entities trading in Canadian markets.
Fundamentally, the Rule aims to ensure a level playing field amongst participants in the derivatives market by establishing a standardized, fair, and transparent regulatory framework. CSA officials call for vigilance among market participants to keep up-to-date with the specifics of the Rule as its full content is released, to ensure the transition to the new regulatory background in 2024 is as smooth as possible.
In anticipation of the Rule’s enforcement, businesses are encouraged to reassess their derivatives activities, and strategically plan their roadmaps to meet the upcoming regulatory changes. This extensive period before the Rule’s enforcement allows businesses ample time to align their strategies and processes with the new requirements.
Given the imminent enactment of this regulation, continuous monitoring of its development will ensure better preparedness. It remains crucial for global corporations and legal practitioners to watch as the CSA releases further details of this business conduct rule for derivatives.