Order Fixing the Day After the Day on which this Order is Made as the Day on which Section 110 of that Act Comes into Force: SI/2019-26
Canada Gazette, Part II, Volume 153, Number 11
Registration
SI/2019-26 May 29, 2019
BUDGET IMPLEMENTATION ACT, 2017, NO. 1
Order Fixing the Day After the Day on which this Order is Made as the Day on which Section 110 of that Act Comes into Force
P.C. 2019-486 May 9, 2019
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 112(1) of the Budget Implementation Act, 2017, No. 1, chapter 20 of the Statutes of Canada, 2017, fixes the day after the day on which this Order is made as the day on which section 110 of that Act comes into force.
EXPLANATORY NOTE
(This note is not part of the Order.)
Proposal
Pursuant to section 112(1) of the Budget Implementation Act, 2017, No. 1 (BIA1 2017), this Order fixes the day after the day on which this Order is made as the day on which section 110 of that Act comes into force.
Objective
The purpose of this Order is to establish the coming into force date for an amendment to the Canada Deposit Insurance Corporation Act (CDIC Act) that will require Canada’s Domestic Systemically Important Banks (D-SIBs) footnote 1 to develop, submit and maintain a resolution plan that meets the requirements referred to in paragraph 11(2)(e) of the CDIC Act, thereby supporting the ongoing stability of the financial system in Canada.
Background
The Canada Deposit Insurance Corporation has been responsible for providing deposit insurance for Canadian banks since it was established by the CDIC Act in 1967. Following the financial crisis in 2008, and in line with the development of international standards, CDIC’s powers and tools have been expanded to facilitate the orderly resolution of its member institutions in the event of a failure.
In its capacity as resolution authority, CDIC has undertaken a number of initiatives to ensure its readiness to deal with any banking failures. One of them pertains to the development of resolution plans, which have been developed by Canada’s D-SIBs since 2015. Resolution plans serve to demonstrate how an institution can be credibly resolved, in a manner that ensures the continuity of critical business and financial services without severe disruption and without exposing taxpayers to loss, in the unlikely event they should fail.
The BIA1 2017 enabled the CDIC Board of Directors to make a by-law establishing a framework to guide the development of resolution plans (paragraph 11(2)(e) of the CDIC Act). This provision came into force upon the BIA1 2017 receiving royal assent. The resulting Canada Deposit Insurance Corporation Resolution Planning By-law (the By-law) prescribes the requirements for Canada’s D-SIBs to develop, submit and maintain resolution plans, including the contents of the plans (e.g. description of critical functions and services, description of material legal entities, resolution strategy that could be employed in the event of a failure, assessment of impediments to the implementation of the resolution strategy, etc.).
The BIA1 2017 also prescribed in legislation the requirement for Canada’s large banks to develop resolution plans that meet the requirements referred to in paragraph 11(2)(e) and submit those plans to CDIC. The coming into force date of this provision had been postponed until such time as the supporting framework (i.e. the by-law referred to in paragraph 11(2)(e) of the CDIC Act) would be in place.
Implications
This Order establishes the coming into force date of the requirement for D-SIBs to develop, submit and maintain a resolution plan that meets the requirements referred to in paragraph 11(2)(e) of the CDIC Act.
The supporting framework, established under the Canada Deposit Insurance Corporation Resolution Planning By-law (the By-law), has now been finalized and will come into force on the day on which section 110 of the BIA1 2017 comes into force or, if it is registered after that day, on the day on which it is registered.
Consultations
CDIC undertook a public consultation, including targeted consultations with the D-SIBs on the elements of the By-law. Additional consultations with the D-SIBs took place in June and December 2018 and through publication of the draft By-law in the Canada Gazette, Part I, on February 2, 2019, for a 30-day comment period. Feedback from industry has been considered throughout the development of the By-law.
Departmental contact
Justin Brown
Director
Financial Stability
Capital Markets Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: justin.brown@canada.ca