The Canadian Securities Administrators (“CSA”) recently announced that the securities regulatory authorities in Alberta, British Columbia, New Brunswick, Northwest Territories, Nova Scotia, Ontario, Quebec, Saskatchewan and Yukon are adopting amendments (the "Amendments") to Multilateral Instrument 25-102 Designated Benchmarks and Benchmark Administrators (“MI 25-102”) to introduce a regulatory regime in respect of commodity benchmarks and their administrators.

As we discussed in a previous post, MI 25-102 became effective in July 2021 to permit regulators to designate and regulate financial benchmarks and their administrators as well as to regulate contributors and certain benchmark users. At that time, the CSA had also proposed the Amendments, which would implement a comprehensive regime for the designation and regulation of commodity benchmarks and the persons or companies who administer them. The CSA continue to be of the view that adopting the Amendments will codify international best practices.

A benchmark is a price, estimate, rate, index or value that is:

• determined, from time to time, by reference to an assessment of one or more underlying interests;
• made available to the public, either free of charge or on payment; and
• used for reference for any purpose, including:
  • determining the interest payable, or other sums that are due, under a contract, derivative, instrument or security;
  • determining the value of a contract, derivative, instrument or security or the price at which it may be traded;
  • measuring the performance of a contract, derivative, investment fund, instrument or security; or
  • any other use by an investment fund.

Under the Amendments, a “designated commodity benchmark” means a benchmark that is:

• determined by reference to or an assessment of an underlying interest that is a commodity other than a currency; and
• designated for the purposes of the instrument as a “commodity benchmark” by a decision of the securities regulatory authority.

According to the CSA, while regulators do not currently intend to designate any administrators of commodity benchmarks, they may do so in the future on public interest grounds, including where a commodity benchmark is sufficiently important to commodity markets in Canada or where regulators become aware of activities that raise concerns that align with certain regulatory risks.

Subject to obtaining necessary ministerial approvals, the Amendments will come into force on September 27, 2023.