On July 25, the Canadian Securities Administrators (CSA) announced specific temporary exemptions from various obligations in National Instrument 93-101 Derivatives: Business Conduct (NI 93-101) which comes into force on September 28, 2024. As a reminder, the new rule sets out robust requirements for the business conduct of advisers and dealers who advise or deal in over-the-counter (OTC) derivatives. The rule establishes fundamental obligations that include requirements related to fair dealing, conflicts of interest, suitability, reporting non-compliance, and record-keeping. We remind registrants, including advisers registered under NI 31-103 that advise others on derivatives, that they may require revisions to their policies and procedures, client disclosure and client onboarding documentation prior to September 28, 2024, regardless of the partial exemption available to such advisers.
Co-ordinated Blanket Order 93-930 exempts (i) derivatives firms from certain obligations when transacting with certain investment funds with foreign managers or advisers; and (ii) senior derivatives managers from certain reporting obligations. In Ontario, the blanket order expires on March 28, 2026.
The first exemption is intended to ensure that investment funds that are managed by the equivalent of a registered or authorized investment fund manager under the securities legislation or under the commodities futures legislation of a foreign jurisdiction, or advised by the equivalent of a registered or authorized adviser under the securities legislation or under the commodities futures legislation of a foreign jurisdiction, are afforded the same treatment as those funds would be in Canada under NI 93-101 (i.e. would usually be treated as an eligible derivatives party under NI 93-101, transactions with whom are subject to fewer obligations). The exemption does not apply to all obligations; for instance, general obligations toward all derivative parties and segregation of derivatives party assets will still apply.
Under NI 93-101, senior derivatives managers of derivatives dealers must submit an annual compliance report to their board of directors. The deadline for senior derivative managers of derivatives dealers to prepare and submit a compliance report to their board for 2024 has been extended to 2025, provided the firm follows all other applicable provisions of NI 93-101.
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