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Following efforts by global regulators to combat the risk of financial benchmark manipulation, Canadian policymakers are proposing reforms to a key Canadian rate, the Canadian Dollar Overnight Repo Rate Average (CORRA).

The Bank of Canada published a consultation paper today that proposes introducing a new methodology for calculating CORRA and expanding the range of transactions used in its calculation.

The proposals come as global policymakers shift away from survey-based rates such as LIBOR toward risk-free rate (RFR) benchmarks.

Unlike some of the benchmarks that have proven susceptible to manipulation by traders, CORRA is already based on transaction data, not bank submissions. Enhancements to CORRA would improve its “reliability, robustness and representativeness,” says the paper, authored by a working group consisting primarily of industry firms and the Bank of Canada.

The group, the Canadian Alternative Reference Rate Working Group (CARR), says the proposed enhancements have been developed to ensure that the revised approach complies with the latest guidance on the calculation and use of financial benchmarks from the International Organization of Securities Commissions.

Enhancements to the existing Canadian overnight RFR, rather than the introduction of a new rate, would “ease the Canadian markets’ transition to the benchmark and support its usage,” the paper says.

The CARR says it’s seeking feedback on the proposals by April 30. Additionally, it’s launching two new working groups: one will focus on transitioning to CORRA as a reference rate in Canadian-dollar financial products, and the other will examine the need for, and construction of, a term risk-free rate benchmark.

“As markets increasingly transition globally toward using RFRs as their primary benchmarks, it is expected that Canadian financial products will also increasingly transition to using enhanced CORRA,” it says.