The Office of the Superintendent of Financial Institutions (OSFI) announced July 19 that it is deferring previously announced timelines for deposit-taking institutions (DTIs) to align with the liquidity adequacy requirement (LAR) guidelines for those offering high-interest savings account exchange traded funds (HISA ETFs).
OSFI says it is providing additional clarification related to the liquidity treatment of wholesale funding sources with retail-like characteristics.
“There has been rapid growth in both retail and institutional investor interest in HISA ETFs in Canada over the past few years. In some cases, the liquidity practices related to these products has varied between DTIs,” they write. “Instead of expecting them to adhere to current guidance on August 1, 2023, OSFI will confirm any changes to LAR guidelines in October 2023. DTIs are expected to align with any changes by January 2024.”
OSFI received over 175 submissions from retail investors, DTIs and ETF providers when it initiated a public consultation in May 2023. They say feedback was varied with some commenting that the current LAR treatment is appropriate while others said HISA ETFs should be treated as more stable, retail funding.
“Industry should remain prepared for the possibility that, because of its review, OSFI confirms a wholesale liquidity treatment for these products,” they warn.
