This week the CSA, Canada’s overarching financial regulatory body, announced (click here) a temporary exemption for certain reporting requirements related to unique product identifiers for commodity derivatives under its Trade Reporting Rules which are due to enter into effect in July 2025.
What is it about?
- In July 2024 the CSA announced changes to its transaction reporting regime aimed at harmonizing over-the-counter (OTC) derivatives data reporting with global standards, including the use of unique transaction identifiers and unique product identifiers (UPIs). These changes were due to enter into effect on 25 July 2025. Given regulatory power resides at the provincial/territory level in Canada, Coordinated Blanket Orders (CBOs) are agreed amongst the individual securities regulators from the provinces/territories under the coordination of the CSA, with final agreed rules published separately by each (hence the 13 separate publications);
- Under the current rules, counterparties report a UPI code corresponding to the type of derivative recognized or designated by the trade repository to which the derivative is reported. Under the new rules market participants must use a UPI assigned by the Derivatives Service Bureau (a so-called DSB UPI), as already used in the EU, UK, Australia, and Singapore. The CSA has received numerous requests to delay the start date of the new DSB UPI requirement for commodity derivatives as the CFTC has not yet implemented the DSB UPI for commodities. This is an issue as all designated and recognized trade repositories in Canada are provisionally registered with the CFTC, and many derivatives are required to be reported in both Canada and the US. Given the common use of systems, enforcing the new standard on Canadian firms would create an unwanted disjoint;
- Due to the above, the regulators have agreed to exempt commodity derivatives from this new requirement effective from 25 July 2025 when the requirement are due to enter into force. The CSA expects the CBO to be revoked in all jurisdictions at an “appropriate time” with only the Ontario Securities Commission (OSC) setting a pre-emptive expiry date of 24 January 2027 (unless it is extended or revoked earlier by the OSC). The CSA does not intend to recommend revocation before the CFTC’s implementation of the DSB UPI for the commodity asset class without consulting with market participants.
The CSA’s full announcement may be found here. For firms active in OTC commodity derivatives in Canada are advised to notify the relevant IT team responsible for implementing this reporting change. Firms falling under the OSC’s jurisdiction should calendarize the stated expiry date of the exemption. RegTrail will continue to track this topic.