OSFI clarifies expectations around wholesale funding sources such as HISA ETFs

The Office of the Superintendent of Financial Institutions (OSFI) is announcing additional clarification related to the liquidity treatment of wholesale funding sources with retail-like characteristics such as high-interest savings account exchange traded funds (HISA ETFs). 

There has been rapid growth in both retail and institutional investor interest in HISA ETFs in Canada over the past few years. In some cases, the liquidity practices related to these products has varied between deposit-taking institutions (DTIs).

After reviewing submissions received during its May 2023 consultation, OSFI has decided to defer the previously announced timelines for affected DTIs to align with the Liquidity Adequacy Requirement (LAR) guideline for these products. Instead of expecting them to adhere to current guidance on August 1, 2023, OSFI will confirm any changes to the LAR guidelines in October 2023. DTIs are expected to align with any changes by January 2024.

OSFI reminds deposit-taking institutions that although some innovative funding products, such as HISA ETFs, may have retail characteristics, they remain wholesale funding sources without fixed terms or deposit insurance protection. Accordingly, and in the interim, OSFI expects financial institutions to prudently manage the risk of liquidity runoffs associated with these products.