By-law Amending the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law: SOR/2026-53
Canada Gazette, Part II, Volume 160, Number 7
Registration
SOR/2026-53 March 19, 2026
CANADA DEPOSIT INSURANCE CORPORATION ACT
The Board of Directors of the Canada Deposit Insurance Corporation makes 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.
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:
- (ii) the government of a foreign country, including any of its departments or agencies,
(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:
- (v) a central counterparty, or
- (vi) a bank that is owned and funded by the governments of two or more countries and established for the purpose of economic development;
(3) Subparagraph 3(c)(ii) of the By-law is replaced by the following:
- (ii) it is entered into, amended or renewed on or after October 1, 2028, or
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.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the amending 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 (MI) of the Canada Deposit Insurance Corporation (CDIC) when the Governor in Council makes an order for the resolution of that federal 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 EFC 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 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 and agencies of a government of a foreign country, and MDBs.
Description
The following table provides more 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 its department 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 subsection 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) as a new subsection. |
Regulatory development
Consultation
CDIC had informal consultations with industry participants at several intervals beginning in September 2024. Stakeholder input, where appropriate, was incorporated into the proposed Amending By-law.
The proposed Amending By-law was prepublished in the Canada Gazette, Part I, on November 1, 2025, for a 30-day consultation period. During this period, CDIC received comments from an industry group that recommended further specificity in respect of the proposed exemptions. To address their comments, CDIC intends to publish guidance on the scope and interpretation of these exemptions. The industry group also requested an extension of the October 1, 2023, compliance date in subparagraph 3(c)(i) of the By-law to October 1, 2028. Considering that this provision applies to a relatively small portion of EFCs compared to those under subparagraph 3(c)(ii), no amendment has been made to change the compliance date for EFCs under subparagraph 3(c)(i).
Instrument choice
There are no available alternative instruments. Amendments to the By-law are required to achieve the objectives.
Regulatory analysis
Benefits and Costs
The amendments will reduce administrative burden on CDIC’s federal member institutions.
Small business lens
The small business lens does not apply to this Amending By-law.
One-for-one rule
The one-for-one rule does not apply to this Amending By-law, as there will be a net reduction in administrative costs.
Regulatory cooperation and alignment
The Amending By-law is not related to a work plan or commitment under a formal regulatory cooperation forum.
International obligations
This Amending By-law 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 Amending By-law.
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 Amending By-law will come into force the day it is published. Full 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