CDIC EFC By-law: Exempt CCPs and MDBs

Summary#

The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) is proposing changes to the Canada Deposit Insurance Corporation Eligible Financial Contracts By-law. The proposal would exempt certain types of counterparties — central counterparties, departments or agencies of foreign governments, and multilateral development banks — from a requirement that some contracts include language recognizing CDIC’s temporary “stay” rules; the proposal is published for comment in the Canada Gazette, Part I on November 1, 2025 with a 30 days comment period, and affected firms would have until October 1, 2028 to comply if the change is adopted.

What it does#

• Adds a clear definition of central counterparty and clearing and settlement system so the rule covers the intended entities without relying on the Payment Clearing and Settlement Act.
• Exempts the following from the class of contracts that must carry the CDIC stay wording:
  • central counterparties (CCPs);
  • the departments or agencies of a government of a foreign country (not just the foreign government itself);
  • multilateral development banks (MDBs) — described as banks owned and funded by the governments of two or more countries for economic development.
• Moves the compliance date for new or amended contracts to October 1, 2028 (previously October 1, 2024 in the current By-law).
• Keeps the underlying rule that federal members must have eligible contracts include wording agreeing to CDIC’s stay provisions, but excludes the newly exempted parties from that requirement.
• The text says the amended by-law would come into force on the day it is published in the Canada Gazette, Part II (this notice in Part I is the consultation step).

Who's affected#

• Federal member institutions of CDIC (banks and other CDIC members) — they write and maintain the eligible financial contracts and will be the main organizations adjusting contract templates.
• Counterparties to those contracts:
  • central counterparties (CCPs),
  • departments or agencies of foreign governments,
  • multilateral development banks (MDBs) — these groups would be excluded from the requirement to include CDIC stay language.
• Other market counterparties and legal teams that negotiate cross-border financial contracts may notice fewer administrative or drafting requests from Canadian members.
• If it is unclear who is affected in a specific case, the source suggests institutions should check whether a counterparty fits the new definitions.

Why it matters#

• It reduces paperwork and compliance work for Canadian banks and their counterparties by widening who is exempt from adding specific contract language. That is the primary stated benefit.
• The change aims to align Canada with practices used by similar authorities abroad, which may make cross-border contracting smoother.
• The underlying goal is to preserve clarity about enforcement of CDIC’s temporary stay rules in the event a member institution enters resolution, while avoiding unnecessary burden on widely accepted or sovereign counterparties.
• This is a proposed amendment (publication in Part I). Stakeholders have 30 days from November 1, 2025 to comment. The amendment would not take effect until it is published in Part II and then firms would have until October 1, 2028 to meet the new rule.