The Office of the Superintendent of Financial Institutions (OSFI) published its latest set of changes to the capital adequacy requirements (CAR) on Friday that includes revisions to the treatment of insured residential mortgages and provides final guidance on the implementation of the downturn loss given default (DLGD) floor that applies to banks using internal models for loans secured by residential real estate.

“These updates provide a measured and forward-looking response to the changing risks occurring in the Canadian mortgage market,” OSFI says.

The revised guideline also clarifies how the rules will apply to federal credit unions and sets out how OSFI will implement the countercyclical capital buffers required under Basel III.

Finally, the revisions also include OSFI’s implementation of the equity investment in funds rules issued by the Basel Committee on Banking Supervision.

“The issuing of this guideline represents an important proactive response to global capital adequacy standards issued by the Basel Committee in the context of changing risks in Canada,” says OSFI assistant superintendent Carolyn Rogers in a statement.

The changes are in force as of Nov. 1 for institutions with an Oct. 31 fiscal yearend and on Jan. 1, 2017 for institutions with a Dec. 31 fiscal yearend.