With the cessation of Canadian Dollar Offer Rate’s (CDOR) publication in June 2024, it is expected that Bankers’ Acceptance (BA) will cease to exist as a money market instrument. In response to investors’ concerns, the Canadian Fixed-Income Forum (CFIF) sponsored a series of targeted workshops to collect feedback and discuss potential options for investors and other market participants to replace BAs.
Over 80 industry experts, representing banks, dealers, issuers, asset managers, pension funds, insurance companies, regulators, and financial infrastructure providers, have participated in the workshops. Today, CFIF published a White Paper summarising the key findings from the workshops.
BAs are important short-term Canadian dollar money market assets, currently comprising about 20% of the notional outstanding in the Canadian money market. They are the second largest money market instrument after Government of Canada (GoC) treasury bills, and account for a signification portion of the investable product availability in the 1-month maturity bucket.
A heightened level of awareness from investors, issuers, regulatory authorities, and policy makers on alternative investment options to BAs is needed to ensure a successful transition given the relatively short timelines before BAs disappear. CFIF, working with industry, will continue to monitor and help facilitate, where appropriate, a smooth transition away from BAs. To help in this effort, CFIF has formed a BA related working group, co-chaired by Elaine Lindhorst (TD Asset Management) and Charles Lesaux (RBC Capital Markets).
The Canadian Fixed-Income Forum (Forum) is a senior level industry-wide committee established by the Bank of Canada to discuss developments in fixed-income market structure and functioning, market practices, and related policy issues. The goals of the Forum are to:
- enhance the efficiency and resilience of the Canadian fixed-income market;
- improve the quality, clarity and market-wide understanding of Canadian fixed-income trading practices;
- evaluate and propose changes to market infrastructure;
- communicate any recommendations and analysis to oversight authorities, regulators, industry groups and other market participants as needed.
The Forum will not discuss monetary policy or policy issues directly relating to the size and distribution of the federal government’s debt programme which are covered through other fora.
Financial Markets Department
Bank of Canada
Bank of Canada