In response to a perceived decline in liquidity in Canadian fixed-income markets, the CSA has come out with CSA Staff Notice 31-346, an update to clarify the scope of the international dealer exemption.
“The CSA are aware of reports by some market participants of a perceived decline in liquidity in the Canadian fixed income markets, and understand that some market participants have suggested that recent changes in the securities regulatory regime in Canada may have contributed to this perceived decline,” reads the notice.
The regulatory item in question is National Instrument 31-103: Registration Requirements, Exemptions and Ongoing Registrant Obligations
(NI 31-103). The CSA clarified the scope of NI 31-103 to explain that, under certain conditions, an international dealer may trade debt securities of any issuers, including foreign-currency-denominated fixed-income securities offered by Canadian corporate and governmental issuers.
The CSA further stated that its staff is willing to recommend exemptive relief, if required, to allow Canadian issuers and Canadian institutional investors increased access to global fixed-income markets.
“CSA Staff recognize that these are areas of concern for market participants, and have issued this notice to highlight our ongoing consideration of these issues,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers.
To accommodate complications and exceptions that may arise because of the dynamic and changing fixed-income securities markets, the CSA is pursuing ongoing discussions with stakeholders to issue any necessary exemptions and recommend amendments, in the context of pending amendments to NI 31-103. While amendments have not been approved, staff in some jurisdictions may also recommend a blanket order be used to address such concerns.
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