As we first mentioned approximately two years ago, a number of the securities regulatory authorities, including the Ontario Securities Commission, proposed changes to Multilateral Instrument 25-102 Designated Benchmarks and Benchmark Administrators, and its Companion Policy, to provide for a regime for commodity benchmarks and their administrators. The proposed amendments arose in part due to the allegations of manipulation of the London inter-bank offered rate back in 2012, which led to a loss of market confidence in the credibility of financial benchmarks in general. On June 29, the regulators announced that amendments to the Instrument are being adopted effective as of September 27, providing for the designation and regulation of commodity benchmarks and their administrators and stated that the amendments will codify international best practices. While the amendments are for the most part unchanged from the original proposals, there is now new guidance in the Companion Policy regarding the scope of the definition of a commodity benchmark to clarify the regulators views on certain intangible commodities, such as carbon credits and emissions allowances.

There remains no current intention to designate any commodity benchmarks or administrators under the Instrument, but it is noted that the regulators may designate administrators and their associated commodity benchmarks in future on public interest grounds, including where a commodity benchmark is sufficiently important to the commodity markets in Canada, or there are activities that otherwise raise concerns aligning with regulatory risks that have previously been identified within these markets.

July 31, 2023