Canadian Securities Regulators Publish Temporary Exemptions For Derivatives Data Reporting Requirements
On February 20, 2025, the Canadian Securities Administrators (CSA) introduced temporary exemptions from certain derivative data reporting requirements relating to unique product identifiers for commodity derivatives. The temporary exemptions allow market participants to continue using existing unique product identifiers for commodity derivatives after amendments to the reporting rules take effect on July 25, 2025. This temporary relief has been put in place to create alignment with current practices and accommodate systems that report data in both Canada and the United States.
The relief is provided by way of a local blanket order in Ontario entitled Coordinated Blanket Order 96-933 Re Temporary exemptions from certain derivatives data reporting requirements relating to the unique product identifier for commodity derivatives (the “Blanket Order”), which will take effect on July 25, 2025 and expires on January 24, 2027. The Blanket Order is harmonized across all provinces and territories in Canada.
The trade reporting rules from which the relief is granted (the “Trade Reporting Rules”) are Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting, Manitoba Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting, Regulation 91-507 respecting Trade Repositories, and Derivatives Data Reporting (Québec), as amended by Blanket Order n° 2015-PDG-0089 and Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting applicable in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan, and Yukon.
Under this Blanket Order, reporting counterparties and trade repositories can continue to use a trade repository-assigned UPI (“TR UPI”) instead of the Derivatives Service Bureau UPI (“DSB UPI”) when reporting commodity derivatives. In addition, designated trade repositories are temporarily relieved from including a DSB UPI during its validation procedure for derivatives, provided that the procedure designed to validate that derivatives data reported under Data Element Number 117 of Appendix A to the Amended TR (as defined below) satisfies the TR UPI. By offering these exemptions, the CSA aims to mitigate potential inconsistencies that could arise if Canada adopts the DSB UPI requirement for commodity derivatives before the Commodity Futures Trading Commission (CFTC) does so in the United States.
Background
The Trade Reporting Rules require reporting counterparties to use a TR UPI1 to identify derivatives in all recordkeeping and reporting required thereunder. However, the amended Trade Reporting Rules (“Amended TR”), which take effect on July 25, 2025, will require reporting counterparties and derivatives trading facilities to use DSB UPI2 when identifying derivatives in all recordkeeping and all reporting required under the Amended TR. The Amended TR also require a designated trade repository to establish, implement, maintain and enforce a validation procedure. A validation procedure includes validating that a reporting counterparty or derivatives trading facility has reported a DSB UPI under Data Element Number 117 of Appendix A to the Amended TR.
While the DSB UPI is already used in several jurisdictions for various asset classes, the CFTC in the United States has not yet adopted the DSB UPI for commodity derivatives or published an implementation date for the DSB UPI in respect of the commodity asset class.
Currently, many reporting counterparties and designated trade repositories operate under both Ontario Securities Commission (OSC) and CFTC regulations, and, as such, transitioning to the DSB UPI for commodity derivatives in Canada before the United States could cause operational and reporting inconsistencies. To address these concerns, the OSC has granted temporary exemptions allowing market participants to continue using the TR UPI for commodity derivatives until January 24, 2027.
Blanket Order Exemptions
The exemptions granted from the Amended TR are as follows:
- Identification, Recordkeeping and Reporting
Reporting counterparties, designated trade repositories, and derivatives trading facilities are exempted from identifying each commodity derivative with a DSB UPI in their recordkeeping and reporting, provided they continue using a TR UPI. This exemption applies exclusively to commodity derivatives and is valid only if the TR UPI is used in place of the DSB UPI for all applicable reporting obligations required under the Amended TR.
Validation ProcedureDesignated trade repositories are also exempt from the requirement under section 22.2 of the Amended TR, in relation to validating that a reporting counterparty or derivatives trading facility has reported a DSB UPI under Data Element Number 117 of Appendix A to the Amended TR. The Blanket Order requires designated trade repositories to confirm that the reported code satisfies the TR UPI and all other conditions under section 22.2 of the Amended TR continue to be complied with. Specifically, designated trade repositories must continue to:
- Establish, implement, maintain and enforce a validation procedure.
- Notify a reporting counterparty, as soon as technologically practicable after receiving derivatives data, whether the data satisfies the validation procedure.
- Accept derivatives data that meets the validation procedure and create and maintain records of all derivatives data that fails the validation procedure.
- Accept corrections to errors or omissions in previously reported data for all derivatives (including expired or terminated ones), provided the corrected data meets the validation procedure.
Together these exemptions provide market participants with the flexibility to align their reporting obligations in Canada and the United States, ensuring consistent reporting practices.
For further information on these exemptions, please contact any member of our Structured Finance and Derivatives Group.
1 Subsection 30(1) of the Trade Reporting Rules defines “unique product identifier” as “a code that uniquely identifies a derivative and is assigned in accordance with international or industry standards.”
2 Subsection 30(1) of the Amended TR defines “unique product identifier” as “a code that uniquely identifies a type of derivative and is assigned by the Derivatives Service Bureau”.
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