Alert:
A nationwide postal strike or lockout may occur as early as November 3, 2004. Dealer Members must take steps to ensure that document delivery requirements prescribed under CIRO Rules continue to be met.
Canadian Bankers’ Acceptance Rates
In January 2019 the Canadian Investment Regulatory Organization (CIRO) began publishing transaction-based one- and three-month Bankers’ Acceptance (BA) rates. These rates are published on a delayed basis for informational purposes only and replace the BA rates formerly published on the Bank of Canada website.
The data CIRO uses to calculate the Bankers’ Acceptance rates are transaction-based data delivered daily to CIRO through the Market Trade Reporting System (MTRS 2.0) as required by IDPC Rule 7200. In May 2018, CIRO also began publishing transaction-based Bond and Money Markets Secondary Trading Statistics, also formerly published by the Bank of Canada. The publication of the BA rates is another step in CIRO’s work with the Bank of Canada to further enhance transparency of the debt market in Canada for the benefit of all market participants.
In Canada, a Bankers’ Acceptance is a short-term promissory note issued by a borrower (usually a corporation), which upon acceptance by a bank, constitutes an unconditional payment obligation of the bank to the holder which may be traded as a money market instrument.
More specifically, a BA is a direct and unconditional promise to pay a certain sum on a specific date by a borrower drawdown against its established line of credit (called a “BA facility”) at a Canadian bank. Once the drawdown occurs, the accepting (or lending) bank guarantees the principal and interest by stamping the paper, thus becoming fully liable for the payment upon maturity in case of nonpayment by the underlying corporate borrower. Once stamped, the BA is transferred to the bank’s (or dealer’s) stock of money market inventory, where it can be sold to investors in the secondary market. Given the unconditional guarantee, BAs receive the same short-term credit rating as that of the accepting bank. For investors, like other money market securities, BAs are issued and quoted on a discounted basis to the face value of the security, they do not pay a coupon, so the investor’s return is the difference between the original discounted purchase price and the face value.
For more information on the Canadian BA market: Bank of Canada Discussion Paper: A Primer on the Canadian Bankers’ Acceptance Market
For information on CIRO’s BA rate methodology: Canadian Bankers’ Acceptance Rate Calculation Methodology
CIRO Disclaimer
This report ("Report") and the data herein ("Data") are generated by CIRO from data reported by third parties ("Third Parties") to MTRS 2.0. The recipient of this Report ("Recipient") acknowledges that a Third Party is solely responsible for the accuracy, completeness and timeliness of its transaction data reported to MTRS 2.0. CIRO is not responsible for, nor makes any representation or warranty in respect of, the accuracy, completeness, compliance or timeliness of information reported by Third Parties. CIRO has relied on transaction data and reference data from third party vendor sources ("Vendors") for certain content in this Report. CIRO is not responsible for, nor makes any representation or warranty in respect of, the accuracy, completeness, compliance or timeliness of the Vendor information. The Report and Data are provided "as is", "as available" and "with all faults", and without any warranties. For further applicable terms of use, please see the CIRO Website Use Agreement.
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