OTTAWA Jan 13 Canada's banking watchdog will
take on the role of supervising the country's equivalent of the
Libor benchmark lending rate, applying lessons learned from a
global scandal over Libor manipulation.
The Office of the Superintendent of Financial Institutions
(OSFI) said on Monday it will tell banks that submit rates for
the Canadian Dealer Offered Rate, or CDOR, what its expectations
are over the course of 2014.
"The Canadian heads of regulatory agencies is working to
develop an enhanced CDOR oversight framework that will be
informed, inter alia, by new international expectations and
developments, and adapted to the unique characteristics of
CDOR," OSFI chief Julie Dickson wrote in a letter to the banks
The heads of regulatory agencies is comprised of
representatives from the Bank of Canada, the finance ministry,
OSFI and some provincial securities regulators.
The CDOR is determined daily by a survey of rates submitted
by a small group of financial institutions, including Canada's
top banks, and reflects the rates at which contributors are
willing to lend to corporate clients.
An international investigation into alleged manipulation of
the London Interbank Offered Rate, Libor, and other benchmarks
between 2006 and 2010 has led U.S. and European authorities to
fine 10 banks and brokerages around $6 billion to date and seven
men have been charged with criminal offences.
Canada's Competition Bureau this month abandoned its
three-year probe into whether global banks colluded to rig the
setting of the Japanese yen Libor due to lack of evidence.
In response to the scam, global regulators endorsed last
year a set of principles for setting financial benchmarks to
reduce the risk of abuse.
Dickson said the principles would be adapted to suit the
CDOR, which is a committed lending rate and not a borrowing rate
"Given the differences between the two benchmark rates,
certain issues that have been identified regarding LIBOR do not
apply to the same extent in the case of CDOR," she said.