The Office of the Superintendent of Financial Institutions (OSFI) has published the final version of a guidance document that aims to limit the losses one of the large, systemically important banks could face if a major counterparty suddenly failed.
Among other things, the guidance sets tougher limits on the big banks’ exposures to global systemically important banks (G-SIBs) and other Canadian domestic systemically important banks (D-SIBs).
OSFI, which helped develop global rules in this area, said its guidance follows best practices for managing the risks of large exposures, and sets out the regulator’s expectations for the measures the big banks should use for dealing with these risks.
“This new version of the large exposure limits guideline will ensure that Canada has up-to-date large exposure risk management guidance,” Carolyn Rogers, assistant superintendent with OSFI, said in a statement.
“It will also encourage Canada’s domestic systemically important banks to adopt consistent and robust practices for mitigating risks related to large exposures,” she added.
The new guidance takes effect Nov. 1.