CDCC launches SGC note as Canada winds down BA market

The Canadian Derivatives Clearing Corporation (CDCC), Canada’s national central clearing counterparty (CCP) for exchange-traded derivative products and repurchase agreements, announced the launch of the new Secured General Collateral (SGC) Notes program.

SGC Notes are short-term discounted money market instruments developed by CDCC in collaboration with Canadian market participants and designed to meet the demand for the transition from Bankers’ Acceptances (BAs) as a result of the Canadian Dollar Offered Rate (CDOR) cessation.

“We are proud to bring this innovative, customized investment vehicle to market, designed to provide Canada’s market participants with an effective funding solution and support the industry transition from CDOR and Bankers’ Acceptances,” said George Kormas, president of CDCC, in a statement.

SGC Notes provide an investment policy-friendly opportunity for Canadian money market institutional investors to roll their BA exposure into SGC Notes. SGC Notes are linked to the same highly-rated Canadian bank credit exposure as BAs, but are secured with a basket of high quality debt securities (SGC Securities) which are sold to a trust through repurchase agreements cleared through CDCC.

SGC Notes are designed to provide strong investor protection through active risk management by CDCC of the basket of SGC Securities securing the SGC Notes and to leverage TMX Group’s infrastructure, including the recently announced Canadian Collateral Management Service (CCMS), which allows for automated collateral movements.

Read our full interview with TMX Group

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