Canada: Settlement - Trial period announced for the fail fee for Government of Canada securities

Background

In January 2024, The Government of Canada Market Functioning (GMF) Steering Group published the final framework on a fee for failing to settle Government of Canada bond and bill transactions.

Clearstream¹ informs clients that the Collateral Infrastructure and Market Practices Advisory Group (CIMPA) and Canadian Depository for Securities (CDS), on behalf of the Canadian Fixed-Income Forum (CFIF), have now announced the start of a trial period for the framework.

Implementation phases

• The first stage of the trial will start on 8 September 2026 and last for a minimum of 18 months. Fails and associated fail fees will be calculated but not charged or disbursed.
• In a potential second stage, the fail fee would be turned on for one year. This decision will be based on a recommendation by CIMPA and endorsement by CFIF.
• Finally, a comprehensive assessment will be performed to determine if the fail fee should be permanently maintained, suspended or reactivated, depending on market conditions.

Scope

• The fail fee would apply to the seller in delivery-versus-payment transactions.
• It would apply to settlement transactions of Government of Canada (GoC) bonds and T-bills.

Impact on clients

• RBC Investor Services, as Clearstream depository in Canada, is actively engaged with the GMF and CDS on the implementation of the framework.
• Updates will be provided as they become available.

Further information

Further information is provided on the Bank of Canada website.

For further information, please contact Clearstream Client Services or your Relationship Manager.

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1. Clearstream refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Europe AG (for Clearstream Europe AG clients using 6-series accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.
Clearstream Banking S.A. is registered as an Australian CS (Overseas) Facility, under subsection 824B(2) of the Corporations Act 2001, with registration number ARBN 675 244 783.