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Acceptable Counterparties (“AC”)

AC’s are those entities with whom a Member may deal on a value for value basis, with mark to market imposed on outstanding transactions.  The entities are as follows:

  1. Canadian banks, Quebec savings banks, trust companies and loan companies licensed to do business in Canada or a province thereof. Each of the aforementioned entities must have paid up capital and surplus on the last audited balance sheet (plus such other forms of capital recognized as such in their regulatory regime as well as in this capital formula, e.g. subordinated debt) in excess of $10 million and less than or equal to $100 million to qualify, provided acceptable financial information with respect to such entities is available for inspection.
  2. Credit and central credit unions and regional caisses populaires with paid up capital and surplus or net worth (excluding appraisal credits but including general reserves) on the last audited balance sheet in excess of $10 million and less than or equal to $100 million, provided acceptable financial information with respect to such entities is available for inspection.
  3. Insurance companies licensed to do business in Canada or a province thereof with paid up capital and surplus or net worth on the last audited balance sheet in excess of $10 million and less than or equal to $100 million, provided acceptable financial information with respect to such companies is available for inspection.
  4. Canadian provincial capital cities and all other Canadian cities and municipalities, or their equivalents, with populations of 50,000 and over.
  5. Mutual Funds subject to a satisfactory regulatory regime with total net assets in the fund in excess of $10 million.
  6. Corporations (other than Regulated Entities) with a minimum net worth of $75 million on the last audited balance sheet, provided acceptable financial information with respect to such corporation is available for inspection.
  7. Trusts and Limited Partnerships with minimum total net assets on the last audited balance sheet in excess of $100 million, provided acceptable financial information with respect to such trust or limited partnership is available for inspection.
  8. Canadian pension funds which are regulated either by the Office of Superintendent of Financial Institutions or a provincial pension commission, with total net assets on the last audited balance sheet in excess of $10 million, provided that in determining net assets the liability of the fund for future pension payments shall not be deducted.
  9. Foreign banks and trust companies subject to a satisfactory regulatory regime with paid up capital and surplus on the last audited balance sheet in excess of $15 million and less than or equal to $150 million, provided acceptable financial information with respect to such entities is available for inspection.
  10. Foreign insurance companies subject to a satisfactory regulatory regime with paid up capital and surplus or net worth on the last audited balance sheet in excess of $15 million, provided acceptable financial information with respect to such companies is available for inspection.
  11. Foreign pension funds subject to a satisfactory regulatory regime with total net assets on the last audited balance sheet in excess of $15 million, provided that in determining net assets the liability of the fund for future pension payments shall not be deducted.
  12. Federal governments of foreign countries which do not qualify as a Basel Accord country.

For the purposes of this definition, a satisfactory regulatory regime will be one within Basel Accord country.

Subsidiaries (excluding Regulated Entities) whose business falls in the category of any of the above enterprises and whose parent or affiliate qualifies as an acceptable counterparty may also be considered as an acceptable counterparty if the parent or affiliate provides a written unconditional irrevocable guarantee, subject to approval by IIROC.

Acceptable Institutions (“AI”)

AI’s are those entities with which a Member is permitted to deal on an unsecured basis without capital penalty. The entities are as follows:

  1. Government of Canada, the Bank of Canada and provincial governments.
  2. All crown corporations, instrumentalities and agencies of the Canadian federal or provincial governments which are government guaranteed as evidenced by a written unconditional irrevocable guarantee or have a call on the consolidated revenue fund of the federal or provincial governments.
  3. Canadian banks, Quebec savings banks, trust companies and loan companies licensed to do business in Canada or a province thereof. Each of the aforementioned entities must have paid up capital and surplus on the last audited balance sheet (plus such other forms of capital recognized as such in their regulatory regime as well as in this capital formula, e.g. subordinated debt) in excess of $100 million, provided acceptable financial information with respect to such entities is available for inspection.
  4. Credit and central credit unions and regional caisses populaires with paid up capital and surplus (excluding appraisal credits but including general reserves) on the last audited balance sheet in excess of $100 million, provided acceptable financial information with respect to such entities is available for inspection.
  5. Federal governments of a Basel Accord Country.
  6. Foreign banks and trust companies subject to a satisfactory regulatory regime with paid up capital and surplus on the last audited balance sheet in excess of $150 million, provided acceptable financial information with respect to such entities is available for inspection.
  7. Insurance companies licensed to do business in Canada or a province thereof with paid up capital and surplus or net worth on the last audited balance sheet in excess of $100 million, provided acceptable financial information with respect to such companies is available for inspection.
  8. Canadian pension funds which are regulated either by the Office of Superintendent of Financial Institutions or a provincial pension commission, and with total net assets on the last audited balance sheet in excess of $200 million, provided that in determining net assets the liability of the fund for future pension payments shall not be deducted.
  9. Foreign pension funds subject to a satisfactory regulatory regime with total net assets on the last audited balance sheet in excess of $300 million, provided that in determining net assets the liability of the fund for future pension payments shall not be deducted.

For the purposes of this definition, a satisfactory regulatory regime will be one within a Basel Accord country.

Subsidiaries (other than Regulated Entities) whose business falls in the category of any of the above enterprises and whose parent or affiliate qualifies as an acceptable institution may also be considered as an acceptable institution if the parent or affiliate provides a written unconditional irrevocable guarantee, subject to approval by IIROC.

 Basel Accord Countries

Basel Accord means those countries that are members of the Basel Accord and a country that has adopted the banking and supervisory rules set out in the Basel Accord. [The Basel Accord, which includes the regulating authorities of major industrial countries acting under the auspices of the Bank for International Settlements (B.I.S.), has developed definitions and guidelines that have become accepted standards for capital adequacy.]

 Regulated Entities

Regulated Entities means those entities with whom a Member may deal on a value for value basis, with mark to market imposed on outstanding transactions. The entity is a participating institution in the Canadian Investor Protection Fund or members of an applicable exchanges or an applicable associations.

An applicable exchange for regulated entity purposes means an entity that meets the following criteria:

  1. Is an acceptable exchange. An acceptable exchange is any entity operating as an exchange for securities or derivatives transactions that is subject to legislation and oversight by a central or regional government authority in the country of operation. The legislation or oversight regime must provide for or recognize the exchange’s powers of compliance and enforcement over its members or participants.

  2.  Meets the following criteria:
  1. The exchange maintains or is a member of an investor protection regime equivalent to the Canadian Investor Protection Fund;
  2. The exchange requires the segregation by its members of customers’ fully paid for securities;
  3. The exchange rules set out specific methodologies for the segregation of, or reserve for, customer credit balances;
  4. The exchange has established rules regarding Dealer Member and customer account margining;
  5. The exchange is subject to the regulatory oversight of a government agency or a self-regulatory organization under a government agency which conducts regular examinations of its members and monitors member’s regulatory capital on an ongoing basis; and
  6. The exchange requires regular regulatory financial reporting by its members.

An applicable association for regulated entity purposes means an entity that meets the following criteria:

  1. The association maintains or is a member of an investor protection regime equivalent to the Canadian Investor Protection Fund;
  2.  The association requires the segregation by its members of customers’ fully paid for securities;
  3. The association rules set out specific methodologies for the segregation of, or reserve for, customer credit balances;
  4. The association has established rules regarding Dealer Member and customer account margining;
  5. The association is subject to the regulatory oversight of a government agency or a self-regulatory organization under a government agency which conducts regular examinations of its members and monitors member’s regulatory capital on an ongoing basis; and
  6. The association requires regular regulatory financial reporting by its members.
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