AMF, the financial regulator of Quebec, and the Ontario Securities Commission (OSC) published a notice authorizing the discontinuation of the Canadian Dollar Offered Rate (CDOR) as a designated critical benchmark. Additionally, AMF issued updated the guideline on residential hypothecary (mortgage) lending and published a notice setting out its interpretation regarding the eligibility of Limited Recourse Capital Notes (LRCNs) as Tier 1 capital instruments Other than Common Shares, Category B, or Tier 1B capital instruments.
The AMF and OSC notice on CDOR authorized the request by Refinitiv Benchmark Services (UK) Limited (RBSL) to cease publication of CDOR after June 28, 2024. RBSL is the administrator of CDOR, a domestically important interest rate benchmark. Following the Canadian Alternative Reference Rate Working Group (CARR) recommendation, RBSL issued a public consultation on January 31, 2022, seeking stakeholder feedback on the impact of the discontinuation of CDOR. The findings and recommendation reflect global efforts to reform major interest rate benchmarks, including plans to replace the key interbank offered rates with risk-free reference rates. Based on these findings, RBSL published a CDOR Cessation Notice announcing that the calculation and publication of all tenors of CDOR will permanently cease immediately, following a final publication on Friday, June 28, 2024. The co-lead authorities, AMF and OSC, will continue to conduct appropriate oversight activities during the transition period.
The AMF guideline on residential mortgage lending sets out expectations regarding the granting of residential hypothecary loans stemming from the legal requirement to follow sound and prudent management practices. The goal is to control the risks posed by this activity and better protect borrowers and investors. The guideline covers “residential hypothecary loan” or “residential mortgage,” home equity lines of credit, term loans, and other similar products secured by residential property. AMF expects financial institutions that originate such loans or acquire assets related to such loans to adhere to the principles set out in this guideline.
Keywords: Americas, Canada, Banking, Basel, Regulatory Capital, CDOR, Interest Rate Benchmarks, Lending, Credit Risk, Residential Mortgage Lending, LRCN, Limited Recourse Capital Notes, Benchmark Reforms, OSC, AMF
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The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
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A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.