• Federal Financial Institutions Legislative and Regulatory Reporter
  • December 8, 2017 | Author: Jeffrey S. Graham
  • Law Firm: Borden Ladner Gervais LLP - Toronto Office
  • The Reporter provides a monthly summary of Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions. It does not address Canadian provincial financial services legislative and regulatory developments, although this information is tracked by BLG and can be provided on request. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.

    October

    Institution

    Published

    Title and Brief Summary

    Status

    Finance

    Introduced October 27, 2017

    Bill C-63, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures

    Division 4 of Part 5

    It amends the Canada Deposit Insurance Corporation Act to clarify the treatment of, and protections for, eligible financial contracts in a bank resolution process.

    Division 5 of Part 5

    It amends the Bank of Canada Act to specify that the Bank of Canada may make loans or advances to members of the Canadian Payments Association. It also amends the Canada Deposit Insurance Corporation Act to specify that the Bank of Canada and the Canada Deposit Insurance Corporation are exempt from stays even where obligations are secured by real property or immovables.

    Division 6 of Part 5

    It amends the Payment Clearing and Settlement Act in order to expand and enhance the oversight powers of the Bank of Canada by further strengthening the Bank's ability to identify and respond to risks to financial market infrastructures in a proactive and timely manner.

    Second Reading and Referral to Committee in the House of Commons

    Bank for International Settlements

    Published
    October 25, 2017

    Identification and management of step-in risk

    The guidelines aim to mitigate the systemic risks stemming from potential financial distress in shadow banking entities spilling over to banks.

    Effective by 2020

    OSFI

    [Federally regulated property and casualty insurance companies]

    Published
    October 19, 2017

    Minimum Capital Test for Federally Regulated Property and Casualty Insurance Companies

    The revisions to the guideline are intended to ensure OSFI's capital guidance for P&C companies:

    · incorporates the clarifications provided in respect of inquiries received,

    · includes revised terminology to allow for improved consistency with the quarterly statutory returns,

    · is more consistent with capital requirements in other financial services sectors, where appropriate, and

    · no longer contains provisions for transitional arrangements that have expired.

    Effective January 1, 2018

    Finance

    Published (Gazette) October 18, 2017

    By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law

    Substantive amendments to the By-law are necessary to reflect the importance of electronic means of transacting with financial institutions, and the resultant impact on how depositors receive information about deposit insurance protection. In addition, amendments are required to ensure the By-law continues to contribute to consumer awareness about deposit insurance protection.

    Effective September 29, 2018 with exceptions

    OSFI

    [Bank, Trust and Loan Companies, Life Insurers and Cooperative Credit Associations]

    Published
    October 17, 2017

    Final Revised Guideline B-20: Residential Mortgage Underwriting Practices and Procedures

    · OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

    · OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.

    · OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits.

    Effective January 1, 2018

    OSFI

    [Bank, Trust and Loan Companies, Federally Regulated Insurers and Federally regulated Cooperative Credit Associations]

    Published
    October 5, 2017

    Issuance of Shares or Membership Shares in Consideration of Property

    In these Transactions Instructions, the applicant is generally expected to provide:

    · a description of the transaction or series of transactions

    · a confirmation from a senior officer

    · a description of the basis on which the assessment of each of the elements was made

    · details regarding the level of internal approval required with regard to the transaction, based on the applicant's policies, as well as evidence that the transaction was approved at the appropriate level,

    · an analysis of the effect of the transaction on the financial position and risk profile of the applicant

    Effective

    OSFI

    [Federally regulated financial institutions]

    Published
    October 5, 2017

    Ruling — Acting Jointly or in Concert

    OSFI published a ruling on whether two shareholders (A and B), who are parties to a shareholders' agreement, are "acting jointly or in concert" in respect of the related shares. They do not negate the need to obtain any necessary approval of the transaction under the relevant federal financial institutions legislation. Rulings are not necessarily binding on OSFI's consideration of subsequent transactions as these transactions may raise additional or different considerations.

    Effective

    OSFI

    [Federally regulated financial entities]

    Published September 29, 2017

    Revised transaction instructions for applicants seeking letters patent of amalgamation

    There are two types of amalgamations: short-form and long-form. Both types require the amalgamating entities (i.e., the applicants) to jointly apply to the Minister for letters patent of amalgamation ("Letters Patent") continuing them as one federally regulated entity ("FRE"). Certain conditions, however, must be met before being eligible to apply for Letters Patent.

    Effective