Canadian Structured Finance Lawhttps://www.stikeman.com/en-ca/rss/canadian-structured-finance-law?utm_source=sffp-list-en&utm_medium=email&utm_campaign=sffpCanadian Structured Finance Lawen-CA{50419D07-6E1D-478F-ACA5-F1E7DBA73563}https://www.stikeman.com/en-ca/kh/canadian-securities-law/changes-to-ontario-fee-rules-to-take-effect-in-aprilStikeman ElliottCanadian Securities LawCanadian Structured Finance LawChanges to Ontario’s Fee Rules To Take Effect in April<p><strong>Certain market participants in Ontario’s over-the-counter (OTC) derivatives market will be required to pay an Ontario Securities Commission (OSC) annual participation fee. Reduced fees for most existing fee payers will also take effect, some activity and late fees will be eliminated, and reporting timelines will change. The changes impact both domestic and foreign Ontario capital markets and derivatives markets participants. </strong></p> <p>In a recently issued <a rel="noopener noreferrer" target="_blank" href="https://www.osc.ca/en/securities-law/instruments-rules-policies/1/13-502/notice-coming-force-repeal-and-replacement-osc-rule-13-502-fees-repeal-and-replacement-osc-rule-13">notice of coming into force</a>, the OSC announced that Ontario Securities Commission Rule 13-502 <em>Fees </em>(OSC Rule 13-502) and Ontario Securities Commission Rule 13-503 <em>(Commodity Futures Act) Fees</em> (OSC Rule 13-503) and their companion policies will be repealed and replaced on April 3, 2023. <a rel="noopener noreferrer" target="_blank" href="https://www.osc.ca/en/securities-law/instruments-rules-policies/1/13-502/amendments-osc-rule-13-502-fees-osc-rule-13-503-commodity-futures-act-fees-changes-their-companion">Amendments</a> to the fee rules were published by the OSC on November 23, 2022. The OSC is putting into place an updated fee structure “to ensure that as specific sectors grow more than others, fees collected are proportionate to the cost of regulation across market segments”.</p> <h2>OTC Derivatives Participation Fees</h2> <p>The OTC derivatives sector is expected to continue to rapidly grow year after year, and the OSC indicate that the new fee is being implemented to fund the cost of investing in technology and staffing to support the derivatives regulatory oversight framework. The fee is expected to generate $13.5 million.</p> <p>The annual participation fee will mostly affect large financial institutions that are responsible for the majority of OTC derivatives trading in Ontario, and is comprised of tiers based on a fee payer’s average quarterly outstanding notional amount of all transactions that are required to be reported under OSC Rule 91-507 <em>Trade Repositories and Derivatives Data Reporting</em> (OSC Rule 91-507) over a one-year period. The requirement applies to a derivatives market participant that was a reporting counterparty in Ontario as defined in OSC Rule 91-507, subject to the exclusions listed below.</p> <p>For the first derivatives participation fee payment due on August 29, 2023, participants have the option to calculate their payment based on the outstanding notional amount as at the end of the first derivatives fee year rather than on an average quarterly basis. Annual fees start at $3,000 for outstanding notional between $3 billion to $7.5 billion, and go up to $1.9 million for outstanding notional over $10 trillion (all amount in C$).</p> <p>Fees are not payable:</p> <ul> <li>if a fee payer’s average outstanding notional is under $3 billion,</li> <li>by an entity that is not a reporting counterparty (as defined in OSC Rule 91-507), or</li> <li>by a recognized or exempt clearing agency.</li> </ul> <h2>Reduced Fees and Eliminated Activity Fees</h2> <p>According to the OSC, the participation fee reduction is expected to benefit 98% of registrant firms and unregistered capital market participants and 88% of issuers, and is primarily aimed at small and medium-sized businesses as a part of its ongoing efforts to reduce regulatory burden, foster capital formation and competitive capital markets. The fee calculation will be simplified based on the most recently completed financial statements and will no longer require the use of estimates and subsequent filing of adjustment of fee forms. The deadline for firms to file a completed Form 13-502F4 showing information to determine the applicable participation fee will change from December 1<sup>st</sup> to between September 1<sup>st</sup> and November 1<sup>st</sup>. The fee will continue to be payable by December 31<sup>st</sup> of each year.</p> <p>Other amendments include<strong>: </strong></p> <ul> <li>A reduced activity fee for exempt distribution filings under OSC Rule 45-101 <em>Ontario Prospectus and Registration Exemptions</em> and National Instrument 45-106 <em>Prospectus Exemptions</em>;</li> <li>Removal of the $4500 activity fee for filing an information circular by a person or company in connection with a dissident proxy circular;</li> <li>Elimination of late fees for document filings that attract late fees but do not compromise investor protection;</li> <li>Eliminating various registration related late fees, including late fees on outside activities; and</li> <li>Relief from the duplication of fees for joint applications made by any applicants affiliated with each other.</li> </ul> <h2>Application to Exempt Foreign Firms</h2> <p>Exempt international firms that engage in capital market activities in Ontario in any given year are required to pay an annual participation fee for that year and will therefore also benefit from the reduction in fees if their specified Ontario revenues fall below $100 million. As discussed above, although the participation fee will continue to be due on December 31<sup>st</sup>, exempt firms should note the change in the timeline for filing a complete Form 13-502F4 from December 1<sup>st</sup> to between September 1<sup>st</sup> and November 1<sup>st</sup>.</p> <p>Foreign firms that are required to report a derivatives transaction under OSC Rule 91-507 will also be subject to the new derivatives annual participation fee. As there are currently no registration requirements in place for trading all types of OTC derivatives in Ontario, this fee will apply to any firm that engages in an OTC derivatives transaction in Ontario, regardless of whether the firm is registered or exempt to trade in securities in Ontario.</p>27-Mar-2023 05:55:00{F0872313-9BA0-489C-A9FF-80CFBC0AF670}https://www.stikeman.com/en-ca/kh/canadian-securities-law/csa-publish-derivatives-data-reporting-transition-guidanceAlix d'Anglejan-Chatillonhttps://www.stikeman.com/en-ca/people/d/alix-d-anglejan-chatillonRamandeep K. Grewalhttps://www.stikeman.com/en-ca/people/g/ramandeep-k-grewalCanadian Securities LawCanadian Structured Finance LawFinancial Services UpdateCSA Publish Derivatives Data Reporting Transition Guidance <p><strong>A</strong><strong>mendments to swap data reporting rules are expected to be implemented by the Commodity Futures Trading Commission</strong><strong> (CFTC) in December 2022. The Canadian Securities Administrators (CSA) have issued guidance to market participants for the interim transition period where reporting counterparties will be subject to new global standards in some jurisdictions but not others. </strong></p> <p>The harmonized international derivatives data standards developed by the Committee on Payments Market Infrastructure led by the Bank of International Settlements and the International Organization of Securities Commissions (CPMI-IOSCO) are currently in the process of being implemented by securities regulators globally and are expected to be implemented by the CSA jurisdictions into their derivatives trade reporting rules (Trade Reporting Rules) in 2024. We previously wrote about <a rel="noopener noreferrer" target="_blank" href="https://www.stikeman.com/en-ca/kh/canadian-securities-law/csa-seek-comments-on-enhanced-otc-derivatives-data-reporting-amendments">proposed amendments</a> to the Trade Reporting Rules which were published earlier this year by the CSA on June 9, 2022 (CSA Proposed Amendments), and which included updated data elements to align with the recommended CPMI-IOSCO global standards. Due to the difference in timing of implementation of the CFTC and the CSA amended requirements, there will be a transition period (Transition) during which certain reporting counterparties will be subject to revised reporting requirements of the CFTC but not in Canada. <a rel="noopener noreferrer" target="_blank" href="https://www.osc.ca/sites/default/files/2022-11/csa_20221110_96-303_derivatives-data-reporting-transition-guidance.pdf">CSA Staff Notice 96-303 <em>Derivatives Data Reporting Transition Guidance</em></a> provides guidance to market participants to facilitate reporting during the Transition.</p> <h2>Transition Guidance</h2> <p>Derivatives data that is reportable under the current Trade Reporting Rules, but is not reportable under the CFTC amendments (such as the jurisdiction of a local counterparty), will continue to be reportable under the Trade Reporting Rules during the Transition period. </p> <p>During the Transition period, provided the designated or recognized trade repository supports the reporting of revised data elements required by the CFTC:</p> <ul> <li>market participants may comply with Trade Reporting Rules if they report data according to a CFTC data element that is comparable to the relevant data element in in Appendix A to the Trade Reporting Rules; and</li> <li>derivatives data that is reportable only under CFTC amendments but not under the current Trade Reporting Rules, is not reportable unless market participants choose to report this data if the relevant data element has been proposed in the CSA Proposed Amendments (such as daily margin data).</li> </ul> <p>Designated or recognized trade repositories are not required to support the option for market participants to be able to report revised data elements. As such it is recommended that market participants contact their trade repositories to understand their approach to the different reporting requirements as a result of the timing of the implementation the CFTC amendments. </p>Tue, 22 Nov 2022 12:00:00 Z22-Nov-2022 09:24:00{B6007FB2-383A-43E6-94E8-CF2A70E572B6}https://www.stikeman.com/en-ca/kh/financial-services/bank-loan-and-debt-securities-a-canadian-q-aJennifer G. Leggehttps://www.stikeman.com/en-ca/people/l/jennifer-g-leggeKelly Niebergallhttps://www.stikeman.com/en-ca/people/n/kelly-niebergallFinancial Services UpdateCorporations & Commercial Law UpdateCanadian Structured Finance LawBank Loan and Debt Securities: A Canadian Q&A<p>Two Toronto-based lawyers in our <a href="/en-ca/expertise/banking-finance">Banking & Finance Group</a>, <a href="/en-ca/people/l/jennifer-g-legge">Jennifer G. Legge</a> and <a href="/en-ca/people/n/kelly-niebergall">Kelly Niebergall</a>, recently updated their Canadian chapter of <a href="/-/media/files/kh-general/loans--secured-financing-2022--canada.ashx">Loans & Secured Financing</a>, published by <em>Lexology</em>. This publication is part of the <em>Getting The Deal Through</em> series and provides an excellent overview of the legal aspects of Canada’s commercial lending and secured financing markets, including the following topics:</p> <ul> <li>Market framework;</li> <li>Capital, liquidity and disclosure requirements;</li> <li>Cross-border lending;</li> <li>Security interests and guarantees;</li> <li>Intercreditor matters;</li> <li>Documentation and terms; and</li> <li>Developments and emerging trends.</li> </ul> <p>We are pleased to be able to make this <a href="/-/media/files/kh-general/loans--secured-financing-2022--canada.ashx">8-page publication</a> available for downloading.</p>15-Jul-2021 02:22:00{FE54DFD0-A2EE-422E-B2EA-BACDD89BDB96}https://www.stikeman.com/en-ca/kh/financial-services/asset-management-industry-in-canada-an-updated-guideStikeman ElliottFinancial Services UpdateCanadian Securities LawCanadian Structured Finance LawAsset Management Industry in Canada: An Updated Guide<p>Two members of our Financial Products and Services Group - <a href="/en-ca/people/d/alix-d-anglejan-chatillon">Alix d’Anglejan-Chatillon</a> and <a href="/en-ca/people/e/jeffrey-r-elliott">Jeffrey Elliott</a> - recently authored the <a href="/-/media/files/kh-general/the-asset-management-review---canada-chapter-2020.ashx">Canadian chapter</a> of <em>The Asset Management Review</em> (9<sup>th</sup> ed.), published by Law Business Research Ltd. This publication provides an excellent overview of Canadian law affecting the asset management industry.</p> <p>The topics discussed include the following:</p> <ul> <li>Canada’s <strong>securities regulatory framework;</strong></li> <li>Common <strong>asset management structures</strong> (corporations, trusts, LPs, retail and institutional funds);</li> <li>Main <strong>sources of investment</strong> (pension, insurance, endowments, mutual funds, etc.);</li> <li>Key <strong>trends</strong> (investor protection, cryptocurrency, robo advice, algorithmic trading, fintech, etc.);</li> <li>Sectoral <strong>regulation</strong> (insurance, pensions, hedge funds, private equity, etc.);</li> <li>The <strong>tax treatment</strong> of Canadian funds.</li> </ul> <p>We are pleased to be able to make this <a href="/-/media/files/kh-general/the-asset-management-review---canada-chapter-2020.ashx">26-page updated chapter</a> available for downloading.</p>29-Mar-2021 02:44:00{8483CB8B-B6C0-44F8-85B5-F6A96BDFCA38}https://www.stikeman.com/en-ca/kh/canadian-structured-finance-law/effectiveness-of-new-isda-ibor-fallbacks-for-derivativesCanadian Structured Finance LawEffectiveness of New ISDA IBOR Fallbacks for Derivatives<p>On January 25, 2021, the “Amendments to the 2006 ISDA Definitions to include new IBOR fallbacks” (the “IBOR Fallbacks Supplement”) originally published by the International Swaps and Derivatives Association, Inc. (“ISDA”) on October 23, 2020 became effective. The IBOR Fallbacks Supplement provides for fallbacks in the event of the permanent discontinuation of key interbank offered rates such sterling LIBOR, US dollar LIBOR, EURIBOR and CDOR.</p> <p>Swaps and derivatives confirmations entered into from and including January 25, 2021 which incorporate the 2006 ISDA Definitions will be deemed to include the IBOR Fallbacks Supplement (unless the parties have otherwise agreed). By adhering to the ISDA 2020 IBOR Fallbacks Protocol (the “Protocol”) published by ISDA on October 23, 2020, market participants can amend their confirmations which reference the 2006 ISDA Definitions (or certain other definitions booklets) and which were entered into prior to January 25, 2021 with counterparties who have also adhered to the Protocol in order to incorporate the IBOR Fallbacks Supplement.</p>02-Feb-2021 02:21:00