Changes to CDIC Eligible Financial Contracts

Summary#

This item amends the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law to widen who is exempt from a contract-language requirement about resolution “stay” rules. The change takes effect on publication (published in the Canada Gazette, Part II on April 8, 2026) and gives full compliance time until October 1, 2028.

What it does#

• Adds definitions for central counterparty and clearing and settlement system, and removes the by-law’s previous link to the Payment Clearing and Settlement Act.
• Explicitly expands the exemption to include departments and agencies of the government of a foreign country.
• Exempts central counterparties using the new definition instead of referencing another law.
• Adds an exemption for a bank “owned and funded by the governments of two or more countries” (i.e., certain multilateral development banks).
• Moves a compliance deadline for some contracts from October 1, 2024 to October 1, 2028 to give institutions more time to adjust.
• Updates the contract-language requirement so it reflects the new exemptions.
• The by-law comes into force on publication (April 8, 2026).

Who's affected#

• Federal member institutions of the Canada Deposit Insurance Corporation (banks and similar institutions that must follow the by-law).
• Central counterparties (CCPs) that clear and settle trades, and entities that run clearing/settlement systems.
• Departments and agencies of foreign governments and certain multilateral development banks.
• Counterparties to eligible financial contracts (other banks, foreign entities and legal teams that negotiate contract language).
• Industry groups, compliance officers, and risk managers at affected institutions.

If any group is unclear from the text, it’s the exact list of institutions covered under each exemption; the government said it will publish guidance on how to interpret the exemptions.

Why it matters#

• It reduces paperwork and administrative burden for Canadian banks and their trading partners by aligning exemptions with international practice.
• It aims to improve cross‑border certainty during a bank resolution by clarifying which foreign entities do not need the special “stay” language in contracts. This follows guidance from the Financial Stability Board.
• The later compliance date (October 1, 2028) gives firms more time to update contracts and systems.
• In practice, this should make it easier to manage large, cross‑border contracts in a stressed situation and may lower the legal uncertainty that can complicate an orderly resolution.