The Canadian Securities Administrators has published for comment CSA Consultation Paper 91-405 – Derivatives: End-User Exemption. The paper is part of a push to improve regulatory oversight of over-the-counter derivatives.
In the paper, the CSA’s Derivative Committee sets out its recommendations for an exemption from specific requirements being developed to regulate over-the-counter (OTC) derivatives. This end-user exemption would be available to qualifying businesses that use OTC derivatives as a risk management tool.
“The CSA’s commitment to establish a comprehensive framework for OTC derivatives regulation must balance the need to meet international commitments with the needs of individual market participants in Canada,” said Bill Rice, chair of the CSA.
“The proposed end-user exemption would permit a business that uses OTC derivatives to manage its own business risks to continue to use these products in a cost effective manner, without increasing risk to the overall market.”
The paper sets out the Committee’s position on the application of the proposed end-user exemption such as what criteria would be required to qualify, what criteria were considered but excluded, and what a qualifying end-user would need to do to rely on the proposed exemption.
Market participants are invited to submit their comments until June 15, 2012. All responses received will be published on the Autorité des marchés financiers (www.lautorite.qc.ca) and the Ontario Securities Commission (www.osc.gov.on.ca) websites.