AMF, the financial regulator of Quebec, updated the guidelines on capital adequacy for financial services cooperatives and credit unions, with effect from February 16, 2023. Additionally, the Canadian Securities Administrator (CSA) issued a staff notice providing guidance on the cessation of the Canadian Dollar Offered Rate (CDOR) and the expected cessation of the issuance of Bankers’ Acceptances.
Earlier, on May 16, 2022, Refinitiv Benchmark Services (UK) Limited (RBSL), the administrator of CDOR, had announced, on May 16, 2022, that CDOR will cease publication after June 28, 2024 and will be discontinued over a two-stage transition period. The first stage would run until the end of June 2023, when all new derivative contracts and securities would be expected to transition using an alternative rate like the Canadian Overnight Repo Rate Average (CORRA) and the second stage, until June 30, 2024, would provide market participants with additional time to transition their loan agreements and deal with potential issues related to the redocumentation of legacy securities. The Canadian Alternative Reference Rate (CARR) working group has recommended the use of CORRA or a similar alternative benchmark rate for pricing Bankers’ Acceptances. CARR is developing a one-month and three-month Term CORRA benchmark, with the objective of making such a benchmark available for use by the end of the third quarter of 2023. Market participants are also encouraged to retain legal counsel and file applications for exemptive relief with the applicable securities regulators to facilitate an orderly transition away from Bankers’ Acceptances.
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