Canada’s covered bond plans raise registrar fears

Author: Danielle Myles | Published: 20 May 2011

Breadth of the registrar’s role is the key concern arising from the first outline of Canada’s covered bond legislation. The proposal aims to reflect market practice, leading some to query the need for legislation at all.

The May 11 consultation paper, released by the Department of Finance, raises the possibility of a European-style registrar which would be responsible for reviewing and certifying that transactions are legally compliant, and be involved in the day-to-day decisions for bond programmes.

Such an influential market conduct role would be a radical departure from the role of Canadian regulators, and lawyers are hoping for more limited responsibilities.

"A regulator certifying to investors or counterparties that transactions comply with legislation would be a very unusual role – it is not really a role that exists in relation to banks today," said Peter Hamilton, a corporate and finance partner with Stikeman Elliott.

Aaron Palmer, a securities...