By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law: SOR/2021-28
Canada Gazette, Part II, Volume 155, Number 6
Registration
SOR/2021-28 February 26, 2021
CANADA DEPOSIT INSURANCE CORPORATION ACT
The Board of Directors of the Canada Deposit Insurance Corporation, pursuant to subsection 21(2) footnote a of the Canada Deposit Insurance Corporation Act footnote b, makes the annexed By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law.
Ottawa, December 9, 2020
The Minister of Finance, pursuant to subsection 21(3)footnote a of the Canada Deposit Insurance Corporation Act footnote b, approves the annexed By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law, made by the Board of Directors of the Canada Deposit Insurance Corporation.
Ottawa, February 22, 2021
Chrystia Freeland
Minister of Finance
By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law
Amendments
1 Section 19 of the Canada Deposit Insurance Corporation Differential Premiums By-law footnote 1 and the heading before it are repealed.
2 (1) The paragraph after the heading “6.2 Net Impaired Off-Balance Sheet Assets” in item 6 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law is replaced by the following:
Calculate the net impaired off-balance sheet assets by subtracting the total of the column “Individual allowance for expected credit losses” in Table 6A from the total of the column “Credit equivalent amount” in that Table. If the result is negative, report “zero”.
(2) Tables 6A and 6B to item 6 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law are replaced by the following:
| Complete Table 6A as of the end of the fiscal year ending in the year preceding the filing year, referring to Schedule 39 – Off-balance Sheet Exposures Excluding Derivatives and Securitization Exposures and Schedule 40 – Derivative Contracts of the BCAR form and to the Capital Adequacy Requirements guideline of the Guidelines. | |||||
|---|---|---|---|---|---|
| Impaired Instruments | Notional principal amount a |
Credit conversion factor b |
Credit equivalent amount (a × b) |
Individual allowance for expected credit losses | |
| Direct credit substitutes – excluding credit derivatives | 100% |
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| Direct credit substitutes – credit derivatives | 100% |
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| Transaction-related contingencies | 50% |
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| Short-term self-liquidating trade-related contingencies | 20% |
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| Sale & repurchase agreements | 100% |
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| Forward asset purchases | 100% |
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| Forward forward deposits | 100% |
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| Partly paid shares and securities | 100% |
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| NIFs & RUFs | 50% |
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| Undrawn commitments – excluding securitization exposure | Standardized Approach | 0% | |||
20% |
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50% |
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| Advanced IRB Approach | table 1 note ** | ||||
| Impaired OTC Derivative Contracts | |||||
| Credit derivative contracts | table 1 note * | ||||
| Interest rate contracts | |||||
| Foreign exchange contracts | |||||
| Equity-linked contracts | |||||
| Commodity contracts | |||||
| Other contracts | |||||
| Total | |||||
| Use these totals to calculate element 6.2 | |||||
Table 1 Notes
|
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| Complete Table 6B as of the end of the fiscal year ending in the year preceding the filing year, referring to Schedule 40 – Derivative Contracts of the BCAR form and to the Capital Adequacy Requirements guideline of the Guidelines. | ||||||
|---|---|---|---|---|---|---|
| Impaired OTC Derivative Contracts (in thousands of dollars) | Credit derivative contracts | Interest rate contracts | Foreign exchange contracts | Equity-linked contracts | Commodity contracts | Other contracts |
| Potential Future Credit Exposure (PFE) | ||||||
| Total contracts not subject to permissible netting | ||||||
| Total contracts subject to permissible netting | ||||||
| Exposure at Default (EAD) (after taking into account collateral and guarantees) | ||||||
| Total contracts not subject to permissible netting | ||||||
| Total contracts subject to permissible netting | ||||||
| Total Impaired OTC Derivative Contracts (carry forward to "Credit equivalent amount" column in Table 6A) | ||||||
3 The paragraph after the heading “7.4.23 Stage 1 and Stage 2 allowance on balance sheet assets” in item 7 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law is replaced by the following:
Indicate the sum of the amounts set out for “Stage 1 and Stage 2 allowance (excluding securitization allowance) on balance sheet assets for capital purposes” and “Allowance on assets capitalized under the securitization framework not recognized for capital purposes”, as set out in Schedule 45 – Balance Sheet Coverage by Risk Type and Reconciliation to Consolidated Balance Sheet of the BCAR form.
Coming into Force
4 (1) This By-law, except section 1, comes into force on the day on which it is registered.
(2) Section 1 comes into force on the day on which section 21 of the Canada – United States – Mexico Agreement Implementation Act, chapter 1 of the Statutes of Canada, 2020, comes into force, but if this By-law is registered after that day, that section comes into force on the day on which this By-law is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the By-law.)
Background
The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) made the Canada Deposit Insurance Corporation Differential Premiums By-law (the By-law) on March 3, 1999, pursuant to subsection 21(2) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the CDIC Act). Subsection 21(2) of the CDIC Act authorizes the CDIC Board of Directors to make by-laws establishing a system of classifying member institutions into different categories; setting out the criteria or factors that CDIC will consider in classifying members into categories; establishing the procedures that CDIC will follow in classifying members; and fixing the amount of, or providing a manner of determining the amount of, the annual premium applicable to each category. The CDIC Board of Directors amended the By-law on January 12 and December 6, 2000; July 26, 2001; March 7, 2002; March 3, 2004; February 9 and April 15, 2005; February 8 and December 6, 2006; December 3, 2008; December 2, 2009; December 8, 2010; December 7, 2011; December 5, 2012; December 4, 2013; April 22, 2015; February 4 and December 7, 2016; December 6, 2017; December 5, 2018; and March 6 and December 4, 2019.
Issues
CDIC annually reviews the By-law to confirm that it is up to date and that the terminology referenced in the By-law aligns with the terminology that is used in regulatory filings requested by the Office of the Superintendent of Financial Institutions (OSFI). This alignment ensures that CDIC member institutions have clarity on the data requirements, and that CDIC receives the appropriate information from its member institutions. As a result, technical amendments are being made to the By-law through the By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law (the Amending By-law).
The amendments align the By-law with OSFI's Basel Capital Adequacy Reporting form (BCAR form).
The By-law currently requires member institutions to prepare and maintain records that accurately and fully describe and disclose the information on which the information provided in the Reporting Form is based and to retain these records in Canada for a period of six years. The Amending By-law repeals these requirements from the By-law. Those same requirements will now be found in the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law, which contains various other record-keeping requirements.
Description
The table below provides more detail about the amendments in the Amending By-law.
| Amended part of the By-law | Amending By-law provision | By-law provision | Explanation |
|---|---|---|---|
| Regulations | Section 1 | Section 19 | Repeals the section requiring the maintenance of records describing and disclosing the information on which the information provided in the Reporting Form is based and requiring it to be retained in Canada for a period of at least six years. The requirements under this section are being moved to the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law. |
| Schedule 2, Part 2, Reporting Form | Subsection 2(1) | Item 6.2 | Amendment clarifies the calculation to be made in relation to net impaired off-balance sheet assets. |
| Subsection 2(2) | Tables 6A and 6B | Amendments align the information to be included in tables 6A and 6B with OSFI's BCAR form. The amendments reflect the addition, removal, and modification of several rows and columns in schedules 39 and 40 of the BCAR form, which the tables refer to. | |
| Section 3 | Item 7.4.23 | Amendments clarify that the Stage 1 and Stage 2 allowance on balance sheet assets is comprised of the sum of two data points, since the relevant data point has been split into two data points in this year's BCAR form. |
One-for-one rule
The one-for-one rule does not apply, as the Amending By-law does not result in any change in administrative costs to business.
Small business lens
The small business lens does not apply, as the Amending By-law does not result in any costs to small business.
Alternatives
There are no available alternatives. The amendments must be done by way of a by-law amendment.
Consultation
The amendments in sections 2 and 3 were prepublished in the Canada Gazette, Part I, and subject to a 30-day public consultation period during which no comments were received.
The amendments in section 1 are consequential to a legal obligation in the Canada – United States – Mexico Agreement, and the repealed provision is being replicated in the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law. Therefore, no substantive change is being made to the record retention requirements for member institutions.
Rationale
The Amending By-law ensures that the By-law will remain technically up to date and achieve the stated objective, and it addresses the identified issues. The Amending By-law does not impose any additional regulatory costs or administrative burden on industry.
Implementation, enforcement and service standards
Sections 2 and 3 of the Amending By-law come into effect for the 2021 premium year. Section 1 comes into force on the day on which section 21 of the Canada – United States – Mexico Agreement Implementation Act, chapter 1 of the Statutes of Canada, 2020, comes into force, but if the Amending By-law is registered after that day, it comes into force on the day on which it is registered. There are no compliance or enforcement issues related to the Amending By-law.
Contact
Mueed Peerbhoy
Senior Legal Counsel
Canada Deposit Insurance Corporation
50 O'Connor Street, 17th Floor
Ottawa, Ontario
K1P 6L2
Telephone: 343‑572‑9516
Email: mpeerbhoy@cdic.ca