This Week in Finance: CMHC Changes Its Mind and OSFI Takes on Crypto



Some of the most interesting developments in the financial world this week

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A summary of some of the most interesting developments in the financial world over the past seven days.


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CMHC subscription resumption

Last summer, the Canada Mortgage and Housing Corporation raised eyebrows in the real estate industry when it announced it would tighten its underwriting practices, a move that was followed by a letter from CEO Evan Siddall urging major banks in Canada to avoid subprime loans and “unnecessarily undermining CMHC’s presence in the market.”

“Please put our country’s long-term outlook ahead of short-term profitability,” Siddall wrote.

The tightening has indeed cost CMHC market share and the letter angered banks, and this week, under the leadership of a new CEO, CMHC said it was backtracking. stricter standards.

After reversing the cuts, to qualify for mortgage insurance, an applicant’s gross debt service ratio must now be 39% (down from 35%) and the total debt service ratio has been raised. at 44% against 42%. In addition, the borrower’s credit score should not be less than 600 instead of 680.


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Rob McLister, mortgage writer at RatesDotCa, says the relaxed standards would likely only affect buyers on the fringes of those qualifications, but the loss of market share may have been the biggest problem.

McLister said the company’s market share was cut in half due to Siddall’s rigid guidelines and critical tone of lenders who did not follow CMHC’s lead.

Former CMHC CEO Evan Siddall.
Former CMHC CEO Evan Siddall. Photo by Brent Lewin / Bloomberg Files

Before the rule changes, CMHC had always been the leading insurance lender in the mortgage market, according to McLister. RBC Capital Markets research now places CMHC in third place behind the two other insurance lenders that have closed the gap: Sagen and Canada Guaranty.

“There’s a certain degree of market share that CMHC might not get for a long time, if at all,” McLister told the Financial Post, adding that the two new top lenders may also have gained the loyalty of the Lenders. borrowers.


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CMHC, in its press release detailing the underwriting changes, admitted it had made a mistake and reversed policies to limit the impact on taxpayers because the company is fully backed by the government.

“CMHC needs to get back to a more pro-industry position and sort of separate its overall strategic initiatives – or maybe even leave them to government and start doing what it does best again. “Say provide default insurance to people who don’t get 20 percent down and provide industry insight in terms of data and research,” McLister said.

– Stephanie Hugues


OSFI asks banks for their opinion on crypto

The global financial system is slowly grappling with crypto and the Canadian banking regulator is joining in.


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This week, the Office of the Superintendent of Financial Institutions sent a letter to all federally regulated financial institutions seeking comments on “the prudential treatment of crypto assets.” OSFI’s investigation follows a global consultation launched last month by the Basel Committee on Banking Supervision, part of the Bank for International Settlements, on crypto assets and how banks should treat them in this regard. which concerns capital requirements.

A takeaway from the BIS consultation paper is that not all crypto assets are created equal, and banking regulators will take a close look at the structures and legal rights that flow from them when deciding how much capital to keep. reserved.


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Representations of Bitcoin, Ethereum, DogeCoin, Ripple and Litecoin cryptocurrencies.
Representations of Bitcoin, Ethereum, DogeCoin, Ripple and Litecoin cryptocurrencies. Photo by Dado Ruvic / Reuters Illustration

The big question: who is responsible if things go wrong?

The BIS has proposed two main categories of cryptocurrencies: those that are backed in some way by assets within a regulated system (tokens that confer direct ownership or coins with ” stabilization ‘) and those that are not (such as bitcoin).

Bitcoin and its ilk have endured the toughest regulatory tests, with the BIS essentially proposing that banks keep the equivalent of their entire position in reserve.

OSFI is asking Canadian banks for their views on the 18 questions proposed by the BCBS, plus six more.

  1. CIBC is one of four global banks to launch a pilot platform for buying and selling voluntary carbon credits.

    CIBC and other global banks to launch voluntary carbon offset market platform

  2. Synthetic stocks are joining a strange new world of assets such as digital artwork and NBA game highlights that now trade on blockchains.

    Innovation trumps regulation as synthetic Tesla, Apple stocks start trading on blockchain

  3. Fund managers now realize that investors want to see a transition to renewables, or at least a strategy to reduce emissions from dirty assets.

    Private equity follows money – and money gives up fossil fuels

  4. The Ontario Teachers' Pension Plan is bracing for another $ 70 billion surge in private markets.

    One of Canada’s largest pension plans invests $ 70 billion in private markets


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Other questions for OSFI include whether BCBS is right to look at a bank’s largest absolute position, long or short, rather than offsetting them or trading the positions. shorter, more strictly.

OSFI also asked how the BCBS proposals would “interact with your current or envisioned business models in this space” – a sign perhaps that more are to come.

– Joe Hood


Sports and crypto a match made in marketing heaven

Cryptocurrencies and professional sports are proving to be a lucrative game.

On Wednesday, one of the world’s largest cryptocurrency websites struck a sponsorship deal with the Ultimate Fighting Championship, which is estimated to be worth $ 175 million.

According to a press release, the deal will allow to place logos in the ring as well as on equipment worn by fighters and their cornermen at events.


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CNBC reported the deal was worth $ 175 million over ten years.

“This is just the start of a long relationship with the UFC, and we look forward to what we’ll build together,” said Kris Marszalek, co-founder and CEO of, according to a statement from hurry.

The deal is one of several sports-related deals that the Hong Kong-based exchange signed this year.

In March, he struck a deal with the Montreal Canadiens that saw the company’s name and logo appear on the ice at the Bell Center during Canadiens games.

More recently, he reportedly made a deal to sponsor Formula 1 races for the remainder of the season.

Sports and crypto have become more and more closely linked in recent months.

Mark Cuban, owner of the Dallas Mavericks, has been a strong advocate of cryptocurrency and decentralized finance, or DeFi.

In June, the president of the San Jose Sharks tweeted that the team would accept bitcoin as a payment method for some services and consider it for others.

“Initially, we will accept cryptocurrency for subscriptions, suite leases and partnerships. Other use cases – including match tickets, F&B and merch – will be evaluated over time, ”Jonathan Becher tweeted.

– Joe Hood


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In-depth reporting on The Logic’s innovation economy, presented in partnership with the Financial Post.


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