Consultation on potential cessation of Canadian Dollar Offered Rate

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Feb 07, 2022

The administrator of the Canadian Dollar Offered Rate benchmark (“CDOR”), Refinitiv Benchmark Services (UK) Limited (RBSL), issued a consultation document regarding the potential permanent cessation of the CDOR. Comments are requested by February 28, 2022.

The CDOR is a daily benchmark reference rate for Bankers’ Acceptance ("BA”) borrowings. The Canadian BA market exists primarily within Canada and, at about 20% of the overall money market, constitutes the largest sector of the Canadian dollar money market after Government of Canada treasury bills. CDOR is currently the primary interest rate benchmark in Canada and is widely used in other Canadian dollar financial instruments including interest rate swaps, exchange-traded futures, loans and floating rate notes.

On December 16, 2021, the Canadian Alternative Reference Rate working group (“CARR”) issued a white paper (“White Paper”) recommending that “RBSL should cease the calculation and publication of CDOR after June 30, 2024”. The CARR recommendation has been unanimously endorsed by all members of both CARR and the Canadian Fixed-Income Forum (“CFIF”).

Any decision to cease CDOR remains with RBSL as the designated benchmark administrator of CDOR and CARR’s recommendation does not constitute a public statement or publication of information that CDOR has ceased or will cease permanently or indefinitely. On December 16, 2021, RBSL issued a response to the CARR recommendation4 noting that CARR:

  • Has concluded that certain aspects of CDOR’s architecture will pose risks to its future viability and robustness,
  • Has recommended that RBSL, as the CDOR benchmark administrator, cease publication of all of CDOR’s remaining tenors after June 30, 2024, and
  • Indicates that the decision to cease publication of CDOR ultimately lies solely with RBSL and CARR’s recommendation does not constitute a public statement or publication of information that CDOR has ceased or will cease permanently or indefinitely.

RBSL’s response further noted that RBSL as benchmark administrator for CDOR will conduct its own analysis, engage with market participants and consider what further steps might be necessary in order to reach a conclusion regarding the future of CDOR.

Review the consultation paper on Refinitiv's website.

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