Republication of proposed amendments regarding margin requirements for structured products

Canadian Investment Regulatory Organization (CIRO) is republishing for comment revisions to the previously proposed amendments that would allow qualifying structured products to be margin eligible (Proposed Amendments).

In 2021, IIROC published Notice 21-0032 regarding proposed amendments (2021 proposed amendments) to the Dealer Member Rules and IIROC Rules that would allow margining of structured products that meet certain eligibility requirements. On January 1, 2023, the Board of Directors of CIRO approved the adoption of the 2021 proposed amendments to the Investment Dealer and Partially Consolidated Rules (IDPC Rules).

The main purpose of the Proposed Amendments is to set a margin methodology for structured products which considers the different risk profiles of the two main structured product types.

The Proposed Amendments would:

• require a fixed margin rate of 50% for principal at risk notes and 30% for principal protected notes that meet eligibility criteria
• clarify the requirements for reporting concentration exposures in structured products on Form 1
• maintain the allowance of an alternative component-based margin methodology