Q3 '24 has been an extremely busy period for the market in the U.S. and Canada. Two key regulatory initiatives, the Canadian Rewrite and the SEC 10c-1a rule, are underway.

The long-awaited Canadian rewrite has now been finalized and the implementation date has been set as July 25, 2025. Many in the market were expecting the rules to be aligned with the CFTC, which indeed they have. However, there are some clear distinctions and omissions, which means there will be another phase, presumably in 2026 to mandate the ISO 20022 XML to be used for submission into the Trade Repositories.

Some key changes:

• Non dealer reporting-moving to T+2 for creation and lifecycle data in line with CFTC requirements and reducing the burden on end-user firms.
• Commodity derivatives exclusion if a local counterparty is not a qualified reporting counterparty and the aggregate month-end gross notional amount is under $250,000,000.
• Harmonization of local party definitions across the various Canadian provinces and territories.
• UTI harmonization with global standards.
• Data element harmonization.
• Derivatives dealers to report valuation, collateral and margin data.
• UPI requirement for all asset classes. The CFTC does not yet require UPI for Commodities, so there is a regulatory divergence between ESMA, FCA, and CSA (which require UPIs for all asset classes) and the CFTC, which does not yet.
• ISO 20022 NOT included.
• Verification requirements for derivative dealers and clearing agencies only. This is following a similar path to what the CFTC and ESMA have instituted by requiring firms to verify the data they have reported is accurate. For notional amount derivatives dealers every quarter and derivatives dealers every 30 days.
• A reporting counterparty must notify the Commission of a significant error or omission with respect to derivatives data as soon as practicable after discovery of the error or omission.
• Allowance for position-level reporting in two cases: 1. Derivatives that are commonly referred to as "contracts for difference", where each derivative included in the reported position is fungible with all other derivatives in the reported position and has no fixed expiration date; 2. derivatives for which the only underlying interest is a commodity other than cash or currency, where each derivative included in the reported position is fungible with all other derivatives in the reported position.
• Introduction of porting guidance. Much like the CFTC added specific guidance on how porting (transferring reporting from one Trade Repository to another) would work, the Canadian regulators have also outlined the process.

The other key development in North America is around the SEC 10c-1a rule and FINRA Rule 6500. On August 9, the SEC filed an order stating the decision to finalize the reporting rules has been extended for an additional 60 days. This means that the SEC has until early November to finalize the reporting requirements set by FINRA. Given the number of market participants who commented on the proposed rules, it's understandable that the agencies need additional time to digest, respond and issue final rules. The risk here is that as we get close to year-end, it means less time for the market to digest the reporting requirements, and start the analysis, design and build phase to ensure they are ready for the Jan 2, 2026 go live.

Cappitech has been working closely with Pirum to engage with clients, understand their requirements and initiate the design for a comprehensive 10c-1a reporting solution for the market.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.