IIROC Withdraws Proposal to Permit Partial Swap Offset Strategies

October 3, 2018

The Investment Industry Regulatory Organization of Canada (IIROC) recently announced the withdrawal of proposed amendments to its Dealer Member Rules that would have extended the current margin treatment on swap offsets to partial swap offsets. As we discussed in a previous post, the proposals, initially published in February 2009 and republished with additional housekeeping amendments in 2012, were intended to ensure that capital requirements reflected the reduced position risk of partial swap offsets on interest rate and total performance swaps.

Citing industry concern and recent developments in over-the-counter derivatives regulation both domestically and internationally, IIROC decided to withdraw the proposals with the intention of reassessing and revising them as necessary. IIROC cited specific concerns that the proposals may conflict with the policy framework on minimum standards for margin requirements for non-centrally cleared derivatives published by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions in 2013.

For more information, see IIROC Notice 18-0177.

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