Exemptions Expanded for CDIC Contract Rule

Summary#

The Canada Deposit Insurance Corporation (CDIC) is proposing changes to the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law. The proposal would widen the list of entities exempt from a contract-language requirement and push the compliance deadline to October 1, 2028. The proposal was published in the Canada Gazette, Part I on November 1, 2025, with a public comment period of 30 days.

What it does#

• Keeps the rule that CDIC’s member banks must add language in certain contracts to recognize the stay powers in the Canada Deposit Insurance Corporation Act, but changes which counterparty types are exempt.
• Adds new definitions for central counterparty and clearing and settlement system so the rule no longer depends on the Payment Clearing and Settlement Act.
• Expands exemptions so the by-law will not apply to:
  • central counterparties (CCPs),
  • departments or agencies of a foreign government, and
  • multilateral development banks (MDBs).
• Adds a new exemption specifically for banks owned and funded by the governments of two or more countries (i.e., some MDBs).
• Moves the practical compliance date from earlier timing to October 1, 2028, while the by-law would come into force when it is registered in the Canada Gazette, Part II (if adopted).

Who's affected#

• Federal member institutions of CDIC (for example, banks that are CDIC members) will need to update which contracts must include the CDIC stay language and when.
• Central counterparties (CCPs), departments or agencies of foreign governments, and multilateral development banks (MDBs) will be newly exempted from the contract-language requirement.
• Parties to cross-border or foreign-law eligible financial contracts may see different contract clauses or fewer administrative steps when dealing with Canadian banks.
• If it isn’t clear whether a specific counterparty or contract falls into these categories, affected organizations will need to check the final text or seek legal advice.

Why it matters#

• The change aims to reduce paperwork and administrative costs for Canadian banks by aligning exemptions with international practice.
• It is intended to make the rules sit more cleanly alongside foreign-law contracts and cross-border counterparties, which can improve legal certainty during a bank resolution.
• The later compliance date (October 1, 2028) gives banks time to adjust existing contracts.
• This is a proposed amendment (Canada Gazette, Part I). It is not law yet and could change after the public comment period.