The Canadian Securities Administrators (“CSA”) have published Regulation 93-101 on commercial conduct in derivatives, a move that comes following a 10-year consultation process. The regulation, which will govern over-the-counter (OTC) derivatives operations, as well as the provision of advice on such operations, is slated to come into effect in September 2024. This was announced by the law firm Blake, Cassels & Graydon LLP.
This latest move by the CSA underscores the growing importance and complexity of financial derivatives in the Canadian market. The disclosure indicates an increasing need for regulatory oversight and consumer protections in Canada’s burgeoning OTC derivatives market.
The new regulation aims to ensure the transparency and solvency of transactions between parties, warranting adequate protection for all participants in this market. Furthermore, it also underscores a significant attempt at modernising securities law, by providing guidelines on an area that was once a legal grey zone.
While the CSA has initiated regulatory oversight in this space, it’s crucial that legal professionals, whether in-house or external counsels, become extensively versed with the nature of these instruments and the new regulatory structures, such as Regulation 93-101 governing their conduct.
The full impact of this regulatory development remains to be seen. It is anticipated that the new regulation will cause significant changes in the OTC derivatives market operation and potentially in the wider financial services sector in Canada.