The Canadian Securities Administrators (CSA) is seeking comment on a proposed rule would establish registration requirements for firms that deal in the over-the-counter (OTC) derivatives market.
Published on Thursday, the proposed rule would establish a registration regime for dealers and advisors that transact in the OTC derivatives markets in Canada.
The proposal, which is out for an extended 150-day comment period ending Sept. 17, aims to “help protect investors, reduce risk, and improve transparency and accountability in the OTC derivatives markets,” the CSA says in a news release.
Regulators around the world have been working to step up oversight of the OTC derivatives markets since the global financial crisis helped to expose the relative lack of regulation in these markets.
The proposed registration rule, coupled with business conduct rules that were proposed in April 2017, would establish “a comprehensive investor protection regime for OTC derivatives markets,” that would be in line with evolving post-crisis international standards, the CSA says.
A revised version of the business conduct rules is expected to be published soon for a second comment period, the CSA says, so both sets of rules can be considered together.
The proposed registration rule:
- establishes a registration obligation;
- includes requirements designed to mitigate firms’ risks; and
- aims to ensure the proficiency of certain employees of derivatives dealers and advisors.
It also sets out exclusions and exemptions from the requirement to register, including an exemption for investment dealers as long as they comply with equivalent requirements imposed by the Investment Industry Regulatory Organization of Canada.
The proposed rule aims to leverage the existing securities registration regime, while also tailoring its requirements to the OTC derivatives market, the CSA says.