CSA Rewrite: Will the real Alan McIntyre please stand up (Part 2)

I asked AI tool Claude to write a blog in my voice discussing the Canada Rewrite. The blog that the AI tool wrote is published in Part 1 here.

After reviewing what AI wrote as me, I thought it might be interesting to review Claude’s findings and provide my own commentary on where it got things right – and where it missed some crucial nuances.

Claude’s Goldilocks Perfect Blend Observation

Alan’s AI blog started with:

“The Great Canadian Compromise: How the CSA Rewrite Became the Goldilocks of Derivatives Reporting

After nearly three years of watching the Canadian Securities Administrators (CSA) craft their derivatives reporting rewrite, I’m convinced they’ve pulled off something remarkable: creating a regulatory framework that’s somehow both everything and nothing like its global cousins. It’s like watching someone order poutine with a side of fish and chips while sipping a margarita – technically it shouldn’t work, but here we are.”

I’m impressed that AI referenced and improved on my ‘poutine’ joke from a previous article. I’m even more impressed that the main finding is spot-on: by taking their time, the CSA has arguably benefited by adopting the best of the CFTC Rewrite with a smattering of ESMA’s EMIR elements.

The Canadian timeline was partly practical—they wanted reporting firms to have completed their CFTC Rewrite and EMIR Refit projects first. This was partly Canadian politeness (they didn’t want to overburden firms with too many overlapping projects) and also the real-world difficulties of writing clear, descriptive new rules.

I concur with AI-me that the result is a nice blend of the best of the CFTC Rewrite and EMIR Refit.

The Field Count Nuance Missed by AI

“The Numbers Game: More Fields Than You Can Shake a Stick At

Let’s start with the obvious: field counts. The CFTC managed to slim down to a svelte 128 fields for their 2022 rewrite, clearly believing that less is more. ESMA, meanwhile, went full maximalist with 203 fields in EMIR REFIT, apparently subscribing to the philosophy that if you’re going to ask for data, you might as well ask for everything including the kitchen sink and the recipe for the sandwich the trader ate during execution.

Enter Canada with 148 fields (up from their initially proposed 140), sitting comfortably in the middle like a regulatory Switzerland. It’s neither the American “keep it simple, stupid” approach nor the European “let’s document everything down to the thread count of the counterparty’s suit” methodology. It’s distinctly Canadian – polite, thorough, but not unreasonably so.”

AI-me is correct that the 148 CSA Rewrite fields sits between the CFTC’s 128 fields and EMIR Refit’s 203. However, it’s missing the important nuance that in reality, the CSA fields are far more closely aligned to the CFTC’s fields. While it’s true that the CSA adopted a handful of EMIR Refit fields, the far higher EMIR Refit field count is explained by multiple factors including:

• ESMA publishing the margin fields in a separate table to the transaction fields
• Unfortunate ESMA-isms like dual product identification fields
• A higher prevalence of asset class specific fields (commodities fields in particular).

AI-me also missed the contextual nuance that the CFTC has proposed a further 48 fields to accommodate them rolling out UPI for commodities.

UPI: Where AI got it wrong (phew – my job might be safe for now!)

“The UPI Situation: Taking Sides in the Global Divorce

Here’s where things get interesting. The CSA has decided to require Unique Product Identifiers (UPIs) for ALL asset classes, putting them firmly in the ESMA camp and leaving the CFTC looking like the odd one out at the derivatives reporting dinner party. The Americans are still dragging their feet on commodity UPIs like a teenager being asked to clean their room.

This creates a delicious regulatory arbitrage situation. Canadian firms reporting to multiple jurisdictions now get to experience the joy of generating UPIs for their commodity trades when reporting to Toronto, but not when reporting to Chicago. It’s like being asked to wear both a tie and a Hawaiian shirt to the same party – technically possible, but aesthetically questionable.”

This is where having a human in the loop – someone who’s attended the meetings and followed the progress of certain topics – becomes essential.

AI-me got this one wrong when it concluded:

The CSA has decided to require Unique Product Identifiers (UPIs) for ALL asset classes, putting them firmly in the ESMA camp and leaving the CFTC looking like the odd one out.

I’m being harsh on my AI counterpart here as it is not wrong that Canadian reporting rules require UPI for all five asset classes including commodities. In terms of comparing the CSA requirements with the CFTC’s, this is spot on.

But it’s missing the all-important detail of the prolonged bun-fight that this caused ie. the industry and trade associations lobbying the Canadian regulators to align the commodities UPI compliance date with the CFTC’s (yet to be published) commodities UPI compliance date. The CSA then obliged with a blanket order providing the requested relief to implement UPI for commodities in Canada when the CFTC does likewise in the USA.

I Concur With The Crypto and Timeline Tango Findings

Nothing to add or challenge for these two sections.

ISO 20022 – The Gift That Keeps on Giving

“The ISO 20022 Tease: The Gift That Keeps on Giving

Perhaps the most telling aspect of the CSA Rewrite is what it doesn’t include: ISO 20022. Like the CFTC, they’ve decided to save this particular joy for a future implementation, presumably sometime in 2026. This means we get to look forward to yet another round of system changes, testing, and the inevitable discovery that the ISO 20022 standard is both incredibly comprehensive and utterly bewildering.

It’s like promising to renovate your kitchen but deciding to do it in phases – first the cabinets, then the plumbing, then the electrical, ensuring maximum disruption over the longest possible timeframe.”

I absolutely love that AI-Me has adopted the “Gift that keeps giving” tagline that I first used to describe transaction reporting way back in 2015.

As for the CFTC and the Canadian regulators kicking the ISO 20022 standards can down the road, I agree with me again (starting to become a theme). The current effort avoided in tackling this is merely delaying the pain and baking in yet another implementation further down the road.

To Summarise

The AI analysis was genuinely insightful – it captured the essence of the CSA’s “Goldilocks” approach and identified the key strategic decisions that make the rewrite distinctive. Where it fell short was in the crucial regulatory nuances that only come from following the detailed implementation process.

The question now is whether the Canadians’ careful balance of compromise and pragmatism will prove as effective in practice as it appears on paper.

I already had a very particular issue with AI. The way it’s typically written down in capital letters is often indistinguishable from Al (as in A lowercase L, or Al, as I’m often known). As a result I often read “ask AI” and wonder what has this got to do with me!

Now it seems the situation is even worse than I suspected because AI does a better AL than I do!

It replicated my writing style and replicated my humour (that alone should be a cause for concern, never mind AI driven killer robots, doubling down on McIntyre’s woeful humour should be an urgent concern for the UN!). And worst of all it did a decent analysis. Not perfect but at the same time truly terrifying for someone that earns their crust in the knowledge economy.

And if AI learns how to chat to clients and how to drink pints after work, then I’m well and truly toast!

PS. My partner added that if AI learns how to do housework then I’m getting replaced at home too!!

• For a conversation with Alan about the CSA Rewrite or a free health check of the quality of your reported data, please get in touch.