Canadian Bankers Seek to Extend Grandfathering from FATCA

In a joint letter, the Canadian Bankers Association and the Investment Industry Association of Canada have requested the U.S. Treasury to grandfather swaps and other obligations issued prior to January 1, 2014 from FATCA withholding. Under current Treasury guidance, obligations issued on or after January 1, 2013 would not be grandfathered when FATCA withholding begins in 2014. The Canadians alternatively asked, that if Treasury was unwilling to provide an across-the-board extension of grandfathering, that such extension at least be available for obligations entered into under existing Master Agreements such as the 1992 and 2002 Master Agreements published by ISDA, and Master Repurchase Agreements and Master Securities Loan Agreements published by SIFMA to avoid Canadian banks being forced to choose between taking unknown withholding risk or stopping trading with counterparties under such agreements. Finally, the letter requested that all collateral arrangements securing any transaction or combination of transactions entered into before January 1, 2014 be grandfathered from FATCA.

Click here to view a copy of the joint letter.For questions in regard to this item, please contact Dan Mulcahy.