CSA Derivatives Reporting with
Novatus Global
Ensuring compliance with Canada’s derivatives reporting obligations to enhance market transparency and mitigate systemic risk since the 2008 financial crisis.
What is CSA Derivatives Reporting?
CSA derivatives reporting adheres to a combination of National Instruments and Provincial or Territory based rules. Ontario, Manitoba, and Quebec have historically been the key contributors to the rules and published the original drafts for CSA reporting as part of Canada’s G20 commitments following the 2008 financial crisis. Collectively, these rules require all derivatives transactions involving at least one “local counterparty” are reported to the CSA to enable the monitoring of systemic risk in the Canadian economy.
Who is Required to Report Under CSA Derivatives Reporting?
As described under Part 3 of the OSC Rules, the reporting obligation may fall to one of the following entities:
- Clearing Agencies
- Derivatives Dealers, both financial and non-financial entities
- Swap Execution Facilities (SEFs) if instructed by the reporting party
Are There Exemptions from CSA Reporting?
Yes, under CSA reporting there are a handful of scenarios in which all the parties involved in the transaction are exempt from any reporting obligations to the CSA, these are:
- Transactions between a government and its consolidated entity
- Inter-Affiliate transactions
- Transactions between a local counterparty that only satisfies Section (b) of that definition and a non-local counterparty.
- E.g. A derivatives transaction between a European bank that is a derivatives dealer in Ontario and another European bank.
CSA reporting applies to all derivatives products with a handful of exceptions, examples of these include:
- FX Spot transactions that settle in T+2 or earlier and are not part of an FX Swap
- FX transactions that are entered into for the purpose of settling a related security
- CO transactions other than cash or currency which are entered into with the intent to be settled by physical delivery of the underlying asset
CSA requires reporting of all creation and continuation data no later than 48 hours after the Execution Timestamp reported in the transaction. There is also an obligation for the Trade Repository to make a subset of price related fields available to the public within the same timeframe.
The CSA Rewrite is schedule to go-live on July 25th, 2025. The new technical specifications align closely with the CDE guidance. There are 148 reportable data elements post-rewrite which can be broken into these categories:
- 114 fields – CDE Elements
- 25 fields – CFTC Elements
- 4 fields – ESMA Elements
- 5 fields – Unique to CSA elements
Who Do Firms Report To?
Firms must report to a Designated Trade Repository recognized by the CSA. At the time of writing, these Trade Repositories are:
- DTCC Data Repository
- Chicago Mercantile Exchange
- ICE Trade Vault
Is CSA Reporting Single or Double-Sided?
CSA is a single-sided reporting regime, meaning only one version of a transaction is ever reported. Where both parties hold a reporting obligation, there must be a reporting party determination in absence of any alternative arrangement. Determining the entity who holds the reporting obligation for a given transaction depends on several factors, including:
-
Entity definition (SEF/Clearing Agency/Derivatives Dealer)
-
Entity classification (financial vs non-financial)
-
Domicile (US-person vs non-US person)
-
Counterparty terms as stipulated by the SEF (where applicable)
-
Bilateral counterparty agreement
Enforcement against non-compliance would be administered by member regulators such as the OSC which could take actions including:
- Monetary Penalties for failure to comply with reporting requirements.
- Cease Trading orders preventing firms from participating in the derivatives market.
- Public Disclosure of non-compliance.
The En:ACT platform can support the following regulatory requirements using the outputs of the Assurance, Completeness, or Reconciliation modules:
- The need to submit errors and omissions notifications to the regulator as soon as practicably possible.
- The need outlined under Section 26.1 (c) for the reporting counterparty to verify that the reported derivatives data does not contain an error or omission at least every 30 days.
CSA Reporting FAQs
As a single-sided regime, improper determination of the reporting party is a common error and can lead to overreporting and underreporting scenarios, both are potential causes for fines. The most likely case would be underreporting where the non-local counterparty is unaware that the reporting hierarchy designates them as responsible for reporting.
Delegation is allowed, but is not typical in CSA reporting given the single-sided reporting hierarchy set out in Part 3 of the OSC rules which clearly outlines how to assign a reporting party in all foreseeable circumstances.
The CSA acknowledges that is some cases, crypto assets behave as and should be reported as Commodities. As part of the Rewrite, CSA has also introduced Field 121: Crypto Asset Underlying Indicator to help with transparency when reporting derivatives transactions based on crypto assets.
All derivatives transactions involving a “local counterparty” are reportable under the CSA regulation. These derivatives can generally be grouped into the following asset classes: Commodities, Credit, Equities, Foreign Exchange, and Interest Rates.
The CSA Rewrite will go live on July 25th, 2025.
