Evidence of meeting #87 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was capital.
A video is available from Parliament.
4:55 p.m.
Director, Financial Markets Division, Department of Finance
That is essentially it. They're protected in the same way that cash clearing houses are now. It protects the clearing house, but it also protects the participants in the clearing system, which would be our major banks.
5 p.m.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
In the past, has the CDIC had to bail out any of the financial institutions or any other institution? In practice have there been any cases that required intervention?
5 p.m.
Senior Project Leader, Financial Sector Policy Branch, Department of Finance
With regard to these amendments, it must be said that the suspension of clauses for terminating contracts applies within a fairly recent framework, put in place in 2008. In fact, no institution has needed to invoke these clauses. It has not been put into practice up to now.
5 p.m.
Senior Project Leader, Financial Sector Policy Branch, Department of Finance
Potentially, all institutions that are members of the Canada Deposit Insurance Corporation are subject to these provisions. They apply to all financial institutions subject to the federal framework. In theory they could apply to the whole group.
5 p.m.
Senior Project Leader, Financial Sector Policy Branch, Department of Finance
I do not know the exact number, but I think this information might be available on the corporation's Web site.
5 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I have a brief question further to what Mr. Mai asked.
You said you consulted the provincial regulators, such as the Autorités des marchés financiers, and that they were in agreement. Was it unanimous or did one or another of the regulators express some reservations?
5 p.m.
Director, Financial Markets Division, Department of Finance
The regulators that we would have consulted on the thrust of these amendments would have included the AMF, the OSC, British Columbia Securities Commission, and Alberta. We didn't directly consult any of the others. Those four are part of a working group on over-the-counter derivatives that includes the Department of Finance, the Bank of Canada, and the Office of the Superintendent of Financial Institutions, as well as the CSA, Canadian Securities Administrators, which has been working on implementing Canada's G-20 commitment around over-the-counter derivatives for the last couple of years. This is a small element of it.
We did reach out to them as we were bringing forward these proposals among some other stakeholders, namely the legal community and others, to get a sense as to whether these were the type of amendments that would deal with the issues that a certain party had raised around the PCSA.
5 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
To be more precise, was there a consensus on the issue within your working group?
5 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
There was no dissension or specific concern in this regard?
5 p.m.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Could you tell me whether other measures have been taken to attenuate the risks associated with OTC derivatives?
5 p.m.
Director, Financial Markets Division, Department of Finance
As part of the G-20 commitment, the main element is to clear standardized over-the-counter derivatives. That's an initiative Canada, the U.S. and all other G-20 members are pursuing. Another element of the commitment is to report to a trade repository all over-the-counter derivative transactions, including those that would be cleared, but also uncleared transactions. That is also an initiative that's under way. In Canada that is being led by provincial regulators. They have put out a consultation paper on this question. Their plan is very consistent with what the U.S. has put out through Dodd-Frank and now the CFTC set of rules, and Europe as well.
That's another key element to increase transparency of the central repository of all these transactions that regulators can access to get a sense of what risks are out there and who is bearing them.
5 p.m.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Can you just remind me of the name of the committee or group that is reviewing this situation?
5:05 p.m.
Director, Financial Markets Division, Department of Finance
The group in Canada that's coordinating—because there are a number of players here, including provinces, but also the federal government—is the over-the-counter working group under what's called the heads of agencies group, which is an informal committee chaired by the Governor of the Bank of Canada.
5:05 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Thank you very much.
This is being put forward as a bit of a solution. I think we're trying to get an idea as to just how big the problem is.
Had this legislation been put in place last year, could you give us an indication how many of the cases would have been stayed?
5:05 p.m.
Senior Project Leader, Financial Sector Policy Branch, Department of Finance
As I mentioned, the stay applies when there's a failing bank and the CDIC decides to create a bridge bank to take over some of their operations. This regime was put in place in 2008 and there have been no failures. It's never been used, so I cannot say—
