FEDERAL REG

SOR/2016-11: Canada Deposit Insurance Corporation Differential Premiums By-law — By-law Amending Canada Deposit Insurance Corporation Act

REGISTRATION OF FEDERAL REGULATION - VIA PART II OF THE GAZETTE

Registered
February 5, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the By-law.) Description The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) made the Canada Deposit Insurance Corporation Differential Premiums By-law (the By-law) on March 3, 1999, pursuant to subsection 21(2) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the CDIC Act). Subsection... (Click for more)


House

1st Reading 2nd Reading 3rd Reading

Senate

1st Reading 2nd Reading 3rd Reading

Published on February 5, 2016

Bill Summary

SOR/2016-11: Canada Deposit Insurance Corporation Differential Premiums By-law — By-law Amending Canada Deposit Insurance Corporation Act

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the By-law.) Description The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) made the Canada Deposit Insurance Corporation Differential Premiums By-law (the By-law) on March 3, 1999, pursuant to subsection 21(2) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the CDIC Act). Subsection 21(2) of the CDIC Act authorizes the CDIC Board of Directors to make by-laws establishing a system of classifying member institutions into different categories, setting out the criteria or factors the CDIC will consider in classifying members into categories, establishing the procedures the CDIC will follow in classifying members, and fixing the amount of, or providing a manner of determining the amount of, the annual premium applicable to each category. The CDIC Board of Directors amended the By-law on January 12 and December 6, 2000, July 26, 2001, March 7, 2002, March 3, 2004, February 9 and April 15, 2005, February 8 and December 6, 2006, December 3, 2008, December 2, 2009, December 8, 2010, December 7, 2011, December 5, 2012, December 4, 2013, and April 22, 2015. The CDIC annually reviews this By-law to confirm it is technically up-to-date. As a result, technical amendments are included in the By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law. The amendments are primarily being made to replace the Assets to Capital Multiple (ACM) with a new leverage ratio. In accordance with the Basel III framework, the Office of the Superintendent of Financial Institutions (OSFI) amended its Basel Capital Adequacy Reporting requirements by replacing the ACM with a new leverage ratio. It is therefore necessary to amend the By-law so that the CDIC’s approach to calculating members’ leverage ratios is consistent with the approach taken by OSFI. The following table provides more detail about the amendments, all of which are technical in nature. This table presents more detail about the amendments, all of which are technical in nature. Amending By-law Section By-law Section Explanation By-law By-law By-law [1] 25.1(b) To correct the references in each of subparagraphs 25.1(b)(i) and (ii) to read “50 per cent.” Schedule 2, Part 2, Reporting Form Schedule 2, Part 2, Reporting Form Schedule 2, Part 2, Reporting Form [2] Item 1 As a result of a revised approach taken by the Office of the Superintendent of Financial Institutions, it is necessary to replace the Assets to Capital Multiple (ACM) with the Leverage Ratio (LR). The amendments (a) replace the ACM with the LR in the formula to calculate the Leverage Ratio; (b) update each element of the formula to reflect the replacement of the ACM with the LR; (c) update the instructions to replace references to the Basel III Capital Adequacy Reporting — Credit, Market and Operational Risk (BCAR) form with references to the Leverage Requirements Return (LRR), as the data elements for the LR are now taken from the LRR; and (d) update the formula for calculating the LR Score to reflect the replacement of the ACM with the LR. [3] Item 2 To revise the reference to “Fiscal” in the heading to correctly read “Filing.” [3] Item 2 The amendment removes the exception, as two years of Tier 1 capital risk-weighted assets data is now available. [4] Item 6 To accurately state the full name of the BCAR. [5] Item 7 To clarify that the specified member institutions must indicate “N/A” not just for element 7, but also for element 7.5. [6] Item 8 To clarify that the total is calculated before the stated deduction. [7] Item 8 The amendment aligns the Differential Premium metrics with OSFI’s reporting forms. Schedule 3, Scoring Grid — Quantitative Assessment, Part 1, Capital Adequacy Schedule 3, Scoring Grid — Quantitative Assessment, Part 1, Capital Adequacy Schedule 3, Scoring Grid — Quantitative Assessment, Part 1, Capital Adequacy [8] Schedule 3 This schedule repeats each of the factors in the Range of Scores. It has been amended to reflect the replacement of the ACM with the LR. Alternatives There are no available alternatives. The amendments must be done through a by-law. Benefits and costs No additional costs should be attributed directly to the changes. Consultation As the proposed amendments are technical in nature, only consultation by way of prepublication is necessary. Prepublication took place in the October 17, 2015, edition of Part I of the Canada Gazette. No substantive comments were received. Minor technical drafting comments to increase the clarity of the By-law were received. Those changes are now reflected in the Amending By-law. Compliance and enforcement There are no compliance or enforcement issues. Contact Joanne Lucas Manager Insurance Canada Deposit Insurance Corporation 50 O’Connor Street, 17th Floor Ottawa, Ontario K1P 6L2 Telephone: 613-943-2773 Fax: 613-996-6095 Email: [email protected] Footnote a R.S., c. 18 (3rd Supp.), s. 51 Footnote b S.C. 1996, c. 6, s. 27 Footnote c R.S., c. C-3 Footnote d S.C. 1996, c. 6, s. 27 Footnote e R.S., c. C-3 Footnote 1 SOR/99-120

This Bill does not amend any statutes.

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