With a large number of derivatives affected by the looming end of LIBOR, securities regulators are providing a grace period for derivatives data reporting.
In a joint notice, the Alberta Securities Commission (ASC) and the Ontario Securities Commission (OSC) said there is “no public interest” in pursuing enforcement action against firms for not meeting the usual deadline in the data reporting requirements for over-the-counter (OTC) derivatives that are affected by the end of U.S. dollar LIBOR on June 30 and the transition to new financial benchmarks.
This transition represents a “life-cycle” event under derivatives reporting requirements, which must be reported to trade repositories on the day the event occurs or the next day.
However, given that a large number of OTC derivatives will be affected by the LIBOR transition, the regulators said that meeting the usual deadline for this reporting “may result in operational burden.”
As a result, they indicated that firms will have five business days after the transition takes place to meet their reporting requirements without facing enforcement action.
The regulators also said they will monitor the use of the Canadian Dollar Offered Rate (CDOR) in OTC derivatives “to determine whether similar guidance may be necessary” when CDOR is due to be replaced on June 30, 2024.
“We understand that other Canadian Securities Administrators jurisdictions are considering requests for blanket orders to address this matter,” they added.