The Canadian Securities Administrators (CSA) has published CSA Staff Consultation 91-301, which requests comment on the model provincial rules called Derivatives: Product Determination and Trade Repositories and Derivatives Data Reporting.

They’re collectively referred to as the model reporting rules.

The proposed rules aim to do the following:

  • Define the types of contracts or instruments that are required to be reported to a trade repository;
  • Establish requirements for the operation of trade repositories; and,
  • Establish requirements for transaction data reporting.

The reporting of derivatives transactions to trade repositories is one of the most important components of the G-20 commitments to global reform of the over-the-counter (OTC) derivatives markets.

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Since November 2010, the CSA has published for comment a series of consultation papers recommending proposals to regulate the OTC derivatives markets in Canada.

These new model reporting rules mark the first policy action resulting from the consultation, and will pave the way for future amendments essential to the regulation of OTC derivatives transactions.

Read: CSA proposes OTC derivatives rules

The improvement of market transparency is also key.

“Trade repositories and the requirement to report OTC derivatives contracts to trade repositories will improve transparency in the derivatives markets, mitigate systemic risk and protect against market abuse,” says Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission.

The product determination rule identifies the contracts or instruments that are required to be reported to a trade repository.

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The second trade repositories rule describes requirements for the operation and regulation of recognized trade repositories. It also addresses the mandatory reporting of derivatives transaction data by market participants.

In addition to the two rules, a number of future proposed model rules will be published for comment that relate to the key areas addressed by the consultation papers.

And together, all will formulate a proposed regime for the regulation of the OTC derivatives markets. The model rule process is further described in CSA Staff Consultation 91-301, which accompanies the model reporting rules.

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The proposed rules can be found on CSA members’ websites, and the comment period is open until February 4, 2013.