Canada Gazette, Part I, Volume 159, Number 44: By-law Amending the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law

November 1, 2025

Statutory authority
Canada Deposit Insurance Corporation Act

Sponsoring agency
Canada Deposit Insurance Corporation

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-law.)

Background

The Canada Deposit Insurance Corporation Act (the CDIC Act) limits the actions that certain counterparties to an Eligible Financial Contract (EFC) may take (stay provisions) against a federal member institution of the Canada Deposit Insurance Corporation (CDIC) when the Governor in Council makes an order for the resolution of that federal member institution (MI). These stay provisions temporarily mitigate the risk of a large-scale termination of an MI’s EFCs upon its entry into resolution.

The Financial Stability Board (FSB) identified a risk that domestic legislative stays may not be effective for EFCs governed by foreign law or in respect of a counterparty situated outside of Canada. Specifically, if an EFC is silent regarding a legislative stay, a foreign court may not recognize or import such a term into an agreement. This caused uncertainty regarding the enforceability of the stay provisions contained in the CDIC Act and posed a risk to an orderly resolution.

The FSB subsequently provided guidance on contractual and regulatory measures which could help mitigate this risk. One of the suggested measures to enhance legal certainty regarding cross-border enforceability was to support the adoption of contractual language recognizing a legislative stay requirement.

In keeping with this guidance, CDIC introduced the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law (the “By-law”), which requires that federal member institutions include a provision in certain eligible EFCs to indicate the parties’ agreement to the applicability of the CDIC Act’s stay provisions.

Issues

Currently, the By-law only exempts a subset of central counterparties (CCPs) and does not exempt agencies or departments of foreign governments or multilateral development banks (MDBs). In contrast, peer authorities frequently exempt these entities without restriction. The regulatory disconnect has caused an enhanced administrative burden for CDIC’s member institutions.

An assessment was performed to determine whether the burden was warranted when weighed against the benefits of not exempting the above-mentioned entities in the context of a failure. It was concluded that it was not warranted in this instance and that expanding select exemptions to align with peer authorities would not impair CDIC’s ability to facilitate an orderly resolution.

Objective

The proposed By-law Amending the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law (the “Amending By-law”) modifies the prescribed class of EFCs to exclude CCPs, the departments or agencies of a government of a foreign country, and MDBs.

Description

The following table provides more details about the Amending By-law.

Table: Details about the Amending By-law
By-law section Remove Insert Explanation
Section 1 n/a central counterparty means a corporation, association, partnership, agency or other entity that provides a clearing and settlement system and fully guarantees the performance of, or fully novates, eligible financial contracts that are cleared or settled through that system; This definition is being added to capture the desired entities and remove a previous linkage to the Payment Clearing and Settlement Act.
Section 1 n/a clearing and settlement system means a system or arrangement for the clearing or settlement of payment obligations between counterparties in one or more financial markets, or for the sharing of payment messages for the purpose of clearing or settlement of such payment obligations. This definition is being added to capture the desired entities and remove a previous linkage to the Payment Clearing and Settlement Act.
Paragraph 3(a) (ii) the government of a foreign country, (ii) the government of a foreign country, including any of its departments or agencies; This exemption is being modified to include applicable departments and agencies.
Paragraph 3(a) (v) a central counter-party, as defined in section 2 of the Payment Clearing and Settlement Act; (v) a central counterparty; or Reference to the Payment Clearing and Settlement Act will be removed in favour of the definition being added to Section 1 (See above).
Paragraph 3(a) n/a (vi) a bank that is owned and funded by the governments of two or more countries and established for the purpose of economic development; This new subparagraph is being added to provide an exemption to applicable multilateral development banks.
Paragraph 3(c) (ii) it is entered into, amended or renewed on or after October 1, 2024, or (ii) it is entered into, amended or renewed on or after October 1, 2028, or The compliance date is being modified to provide member institutions with time to adjust to the amended requirements.
Section 4 4 Every federal member institution must ensure that all eligible financial contracts that are part of the class prescribed in respect of it by section 3 contain provisions indicating the parties’ agreement to the application of subsections 39.15(7.1) to (7.104) and (7.11) of the Act in relation to the actions that the parties, other than any referred to in subparagraphs 3(a)(i) to (v), may take. 4 Every federal member institution must ensure that all eligible financial contracts that are part of the class prescribed in respect of it by section 3 contain provisions indicating the parties’ agreement to the application of subsections 39.15(7.1) to (7.104) and (7.11) of the Act in relation to the actions that the parties, other than any referred to in subparagraphs 3(a)(i) to (vi), may take. This provision is being modified to reflect the addition of subparagraph 3(a)(vi).

Regulatory development

Consultation

CDIC had informal consultations with industry participants at several intervals beginning in September 2024. Stakeholder input, where appropriate, has been incorporated into the Amending By-law. Further consultation is being sought through prepublication in the Canada Gazette, Part I.

Instrument choice

There are no available alternative instruments. The amendments must be done by way of a by-law amendment.

Regulatory analysis

Benefits and costs

This amendment will reduce administrative burden on CDIC’s federal member institutions.

Small business lens

The small business lens does not apply to this proposal.

One-for-one rule

The one-for-one rule does not apply to this proposal, as there will be a net reduction in administrative costs.

Regulatory cooperation and alignment

The proposed Amending By-law is not related to a work plan or commitment under a formal regulatory cooperation forum.

International obligations

This proposal is not subject to obligations in Canada’s international trade agreements.

Effects on the environment

No effects based on the environment have been identified for this proposal.

Gender-based analysis plus

No impacts based on gender and other identity factors have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

The proposed Amending By-law would come into effect the day it is registered. Compliance with the Amended By-law will be required by October 1, 2028. There are no compliance or enforcement issues.

Contact

Ran Yang
Senior Legal Counsel
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
Ottawa, Ontario
K1P 6L2
Email: ryang@cdic.ca

PROPOSED REGULATORY TEXT

Notice is given that the Board of Directors of the Canada Deposit Insurance Corporation proposes to make the annexed By-law Amending the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law under paragraph 11(2)(g)footnote a and subsections 39.15(7.4)footnote b and (7.5)footnote b of the Canada Deposit Insurance Corporation Act footnote c.

Interested persons may make representations concerning the proposed By-law within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Kevin Corcoran, Legal Counsel, Canada Deposit Insurance Corporation, 50 O’Connor Street, 17th Floor, Ottawa, Ontario K1P 6L2 (email: kcorcoran@cdic.ca).

Ottawa, October 17, 2025

Gina Byrne
Interim President and Chief Executive Officer
Canada Deposit Insurance Corporation

By-law Amending the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law

Amendments

1 Section 1 of the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law footnote 1 is replaced by the following:

Definitions

1 The following definitions apply in this By-law.

Act
means the Canada Deposit Insurance Corporation Act. (Loi)
central counterparty
means a corporation, association, partnership, agency or other entity that provides a clearing and settlement system and fully guarantees the performance of, or fully novates, eligible financial contracts that are cleared or settled through that system. (contrepartie centrale )
clearing and settlement system
means a system or arrangement for the clearing or settlement of payment obligations between counterparties in one or more financial markets, or for the sharing of payment messages for the purpose of clearing or settlement of such payment obligations. (système de compensation et de règlement)

2 (1) Subparagraph 3(a)(ii) of the By-law is replaced by the following:

(2) Paragraph 3(a) of the By-law is amended by striking out “or” at the end of paragraph (iv) and by replacing paragraph (v) with the following:

(3) Subparagraph 3(c)(ii) of the By-law is replaced by the following:

3 Section 4 of the By-law is replaced by the following:

Contract provisions

4 Every federal member institution must ensure that all eligible financial contracts that are part of the class prescribed in respect of it by section 3 contain provisions indicating the parties’ agreement to the application of subsections 39.15(7.1) to (7.104) and (7.11) of the Act in relation to the actions that the parties, other than any referred to in subparagraphs 3(a)(i) to (vi), may take.

Coming into Force

4 This By-law comes into force on the day on which it is published in the Canada Gazette, Part II.

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