On April 17, 2014, the OSC published proposed changes[1] to OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting (Reporting Rule). The changes are intended to delay implementation of the reporting requirements due to the lack of a trade repository ready to accept the reporting. The changes also lighten the reporting burden on end-users.
New implementation timeline
Under the proposed changes, the new implementation timeline will be as follows:
- New transactions: Reporting of new transactions commences on October 31, 2014 for derivatives dealers and for recognized or exempt clearing agencies (previously July 2, 2014) and June 30, 2015 for non-derivatives dealers (previously September 30, 2014).
- Existing transactions with a derivatives dealer: Existing transactions involving a derivatives dealer that are in effect on October 31, 2014 and not expiring by April 30, 2015 will need to be reported by the derivatives dealer by April 30, 2015. (Previously, existing transactions in effect on July 2, 2014 and not expiring by December 31, 2014 needed to be reported by December 31, 2014.)
- Existing transactions without a derivatives dealer: Existing transactions not involving any derivatives dealer and that are in effect on June 30, 2015 and not expiring by December 31, 2015 will need to be reported by the end-user by December 31, 2015.
Less reporting by end-users
End-users will benefit from the proposed changes in two ways:
- As described above, when a new transaction involves no derivatives dealer, reporting by the end-user will not commence until June 30, 2015 (a 9 month delay). Existing transactions without a derivatives dealer will not need to be reported by end-users until December 31, 2015 (a 12 month delay).
- The proposed changes also eliminate the requirement for the end-user to report when a non-resident derivatives dealer fails to do so. Previously, a reporting obligation arose if the transaction involved a non-resident derivatives dealer who failed to report the creation data.
Unresolved issues
There remain a number of unresolved issues concerning the Reporting Rule which were not addressed in the proposed changes. These include the following:
- Clarification of the "business trigger" for determining when a counterparty is considered to be a "derivatives dealer" and therefore the reporting counterparty.
- Duplication of reporting in multiple jurisdictions (both Canadian and U.S.) unless greater reciprocity and harmonization between jurisdictions is achieved.
- Lack of an express reporting exemption for transactions between affiliates equivalent to the "intragroup transaction" exemption proposed in the Model Provincial Rule on Mandatory Central Counterparty Clearing of Derivatives published on December 19, 2013.
[1] Ontario Securities Commission Notice of Amendments to Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting and Companion Policy 91-507CP Trade Repositories and Derivatives Data Reporting.
