Ontario Securities Commission

National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives

On April 4, 2017, National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives became effective under the Securities Act.

National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives creates a framework for Canadian securities regulators to require that prescribed over-the-counter (OTC) derivatives be cleared through a clearing agency. The national instrument imposes on certain local counterparties mandatory central counterparty clearing of the OTC derivatives listed in the national instrument. Central counterparty clearing of OTC derivatives transactions results in more effective management of counterparty credit risk and reduces systemic risk in the derivatives market.

The OTC derivatives products that have been prescribed for mandatory clearing under the national instrument are standardized and sufficiently liquid. Additionally, clearing services are available to local counterparties for the products. At present, the OTC derivatives that are subject to mandatory clearing are certain classes of interest rate derivatives denominated in US dollars, Euros, British Pounds and Canadian dollars.

The OTC derivatives that are required to be cleared in accordance with the national instrument are also subject to reporting requirements under OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting. Local counterparties

The full text of the national instrument is available in the Ontario Securities Commission’s Bulletin at (2017) 40 OSCB 645 and on the Commission’s website at www.osc.gov.on.ca.

(150-G170)