Harmonized Discretionary Relief for New Trading Rules

Written By Mark Powell

On June 17, 2016, pursuant to Multilateral CSA Staff Notice 96-301 (the "Notice"), the securities regulators of each Alberta, New Brunswick, Nova Scotia and Saskatchewan (the "Announcing Jurisdictions") announced that they were providing harmonized discretionary relief with respect to certain obligations under the derivatives trade reporting rules that recently came into effect in each of the Announcing Jurisdictions (the "New Trade Reporting Rules") as well as the jurisdictions of British Columbia, Newfoundland and Labrador, the Northwest Territories, Nunavut, Prince Edward Island and Yukon (such jurisdictions being the "Other Participating Jurisdictions").

In this regard, each of the Announcing Jurisdictions have issued a version of Blanket Order 96-501 and it is anticipated that the Other Participating Jurisdictions will issue similar local relief prior to the first reporting under the New Trade Reporting Rules on July 29, 2016.

Blanket Order 96-501 is intended to address situations where foreign laws prevent or hinder reporting, and situations where the reporting counterparty to a derivative has been unable to obtain certain information from its counterparty to enable the reporting counterparty to fulfil its reporting obligations under the New Trade Reporting Rules with respect to certain transactions entered on or before December 15, 2017.

While the harmonized discretionary relief contemplated by Blanket Order 96-501 may prove very useful to the counterparties that are required to report derivatives transactions under the New Trade Reporting Rules, it is some additional information contained in the Notice that was of particular interest to us.

More specifically, the Announcing Jurisdictions clarified in the Notice that the anticipated date for first reporting under the New Trade Reporting Rules remains July 29, 2016. Similarly, the anticipated date for first reporting of derivatives transactions that are entered solely amongst "end-users" is still anticipated to be November 1, 2016.

Further, the Announcing Jurisdictions confirmed that, while they are still working on the amendment to the New Trade Reporting Rules that were published in February of this year that, amongst other things, contemplates an exemption to report derivatives transactions entered between affiliates ("Inter-Affiliate Trades"), they anticipate announcing implementation of those amendments soon.

More surprisingly, the Announcing Jurisdictions indicated that they anticipate that those amendments are going to be substantially in the same form as originally published by the Announcing Jurisdictions and the Other Participating Jurisdictions (collectively, the "New Trade Reporting Jurisdictions") in February.

We had anticipated that the New Trade Reporting Jurisdictions would modify their February 2016 proposed amendment to align their Inter-Affiliate Trade exemptions with recently adopted changes made by the securities regulators in Manitoba, Ontario and Quebec in their respective approaches for addressing Inter-Affiliate Trades (see our prior update entitled "Ontario, Quebec and Manitoba adjust approach to reporting Inter-Affiliate Trades" dated May 13, 2016).

Under the new approach of Manitoba, Ontario and Quebec, there is no distinction between Inter-Affiliate Trades entered between Canadian and non-Canadian affiliates. At this stage, it appears as though the New Trade Reporting Jurisdictions are not following the lead of Manitoba, Ontario or Quebec.

That being said, we expect to see the finalized amendment published by the New Trade Reporting Jurisdictions in the next few weeks and any uncertainty with respect to the reporting of Inter-Affiliate Trades should be resolved shortly.

If you have any questions about your trade reporting obligations, please contact our Trading & Derivatives team.