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The Office of the Superintendent of Financial Institutions (OSFI) has issued a final version of Guideline B-5: Asset Securitization (the Guideline), which sets out OSFI’s general expectations for asset securitization transactions undertaken by federally regulated insurance companies. The existing guideline on asset securitization was first published in November 2004, and does not adequately account for the effect of certain events that have impacted the financial services landscape, such as the 2008 global financial crisis, neither…
The Office of the Superintendent of Financial Institutions (OSFI) has issued its final version of the Capital Adequacy Requirements (CAR) guideline and Leverage Requirements (LR) guideline. OSFI updates its CAR guideline periodically to ensure capital requirements reflect the underlying risks and developments in the financial industry. The LR guideline supplements this by setting out the framework for the leverage ratio, which helps measure the adequacy of an institution’s capital. CAR guideline: OSFI’s CAR guideline provides…
On September 30, 2018, Canada and the United States announced they had reached a resolution on certain trade issues and agreed on the text of a new trilateral trade agreement with Mexico to be called the United States-Mexico-Canada Agreement (USMCA). Once ratified, the USMCA will replace the longstanding trilateral North American Free Trade Agreement (NAFTA). NAFTA renegotiations commenced in August 2017, over 20 years after the agreement first took effect in 1994. The USMCA concludes…
The Office of the Superintendent of Financial Institutions (OSFI) has issued its final version of the Corporate Governance Guideline (CGG). The CGG sets out OSFI’s expectations for boards of directors of federally regulated financial institutions (FRFIs). The CGG applies to all FRFIs other than the Canadian branch operations of foreign banks and insurance companies. The key changes made to the CGG are as follows: Providing boards with greater discretion over how they meet the principles…
The Canadian Securities Administrators (CSA) recently released two notices on the implementation and regulation of the Canadian bail-in regime, namely: CSA Staff Notice 46-309, in connection with the regulation of Bail-in Debt (as defined below); and CSA Staff Notice 81-331, in connection with the implications of the bail-in regime on investment fund issuers, subject to National Instrument 81-102 Investment Funds (NI 81-102). According to the Office of the Superintendent of Financial Institutions (OSFI),…
The Office of the Superintendent of Financial Institutions (OSFI) has released proposed revisions to the Leverage Requirements (LR) guideline in order to align with upcoming modifications to Chapter 4 (Settlement and Counterparty Risk) and Chapter 7 (Securitization) of the Capital Adequacy Requirements (CAR) guideline. The LR set out the framework for the leverage ratio, which provides an overall measure of the adequacy of an institution’s capital and serves as a supplementary measure to the risk-based…
The Office of the Superintendent of Financial Institutions (OSFI) has released a discussion paper on the proposed implementation of the final Basel III reforms in Canada. The reforms were published in December 2017 and, in summary, seek to: Enhance credibility in the calculation of risk-weighted assets. Improve the comparability and transparency of banks’ capital ratios. This includes revisions to (i) the standardized approach and internal ratings based approach to credit risk, (ii) the operational risk…
The Office of the Superintendent of Financial Institutions (OSFI) has provided greater transparency to the market surrounding the Domestic Stability Buffer (the DSB) currently held by Domestic Systemically Important Banks (D-SIBs) in a bid to guard against Pillar 2 risks associated with systemic vulnerabilities.  OSFI revealed last week that D-SIBs must hold an extra cushion, or the DSB, to bolster their core capital reserves.  While this cushion has just been publicly disclosed as a requirement,…
Last week, the Office of the Superintendent of Financial Institutions (OSFI) issued its final guideline on total loss absorbing capacity (TLAC) disclosure requirements for Canadian domestic systemically-important banks (D-SIBs). The new guideline sets out the format, timing and location of the TLAC disclosure requirements, among other things. The new guideline further requires that D-SIBs begin publicly disclosing the required TLAC information on a quarterly basis, beginning with the quarter ending January 31, 2019.  While TLAC…
The Office of the Superintendent of Financial Institutions (OSFI), the federal financial institutions prudential regulator, recently addressed the issue of a cap on issuance of covered bonds which presently stands at 4% of a bank’s total assets. OSFI is now taking a hard look at this limit and is doing so in the context of its expectations on a bank’s overall management of asset encumbrance.  The Superintendent of Financial Institutions has stated that any revision…