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Canadian Pari-Mutuel Agency Policy Paper P-011

Canadian Pari Mutuel Agency Policy Paper-011 (PDF version, 266 KB)

Policy Title

Foreign Currency Exchange Rates

Date of Issue

Issued: May 1, 2018

Legislative References

Subsection 51(4) of the Pari-Mutuel Betting Supervision Regulations

Effective Date

May 1, 2018

Issue

Canadian race-course associations that offer inter-track betting into Canada (that is, international common pool betting) are required to convert bets made in foreign currency into Canadian currency when calculating the applicable deductions and pay-out prices further to subsection 51(4) of the Pari-Mutuel Betting Supervision Regulations (the Regulations).

Subsection 51(4) of the Regulations was amended and placed into effect on March 2nd, 2017. The provision reads as follows,

51(4) If a bet is made in foreign currency, the value of the bet for the purposes of calculating the applicable deductions and pay-out prices shall be determined by converting the foreign currency into Canadian currency at one of the following rates, as applicable:

Decision

In order to promote the correct conversion of foreign bets into Canadian currency, the Canadian Pari-Mutuel Agency (CPMA) has provided additional direction for applying the currency exchange rules under three parts; Identification of the correct foreign currency exchange rate, Instructions for internet website sources, and CPMA's position with respect to rounding methods used.

The exchange rate used for race cards that begin past midnight shall use the rate entered at the start of the pari-mutuel system session (that is, when betting is opened). Also, where future betting is offered, (for example advance bets), exchange rates shall be converted to Canadian dollars using the most recent rate applicable to the scheduled day of racing, not before (that is, not when a bet occurred, for example, 10 days before).

Part 1 - Identification of Correct Foreign Currency Exchange Rate

The Bank of Canada changed the way it publishes foreign exchange rates on March 1, 2017. The Bank of Canada published list now includes 26 currencies, reduced from approximately 56 foreign currencies. The list is based on foreign currencies that are most actively traded against the Canadian dollar.

Effective May 1st, 2017 the Bank of Canada stopped publishing the “noon” and “closing” exchange rates, and now supplies a single rate published each day at 16:30 Eastern Time (ET).  This new rate is the applicable rate when referencing the Bank of Canada exchange rates.

Should the Bank of Canada not provide an applicable rate of exchange for a currency, the Pari-Mutuel Betting Supervision Regulations require that associations use the rate provided at the Internet site, XE. Should an applicable rate not be available at this site, whether temporarily or permanently, or if it does not provide an exchange rate for a particular foreign currency, then associations must use the rate provided on the Internet site, Oanda.

This approach ensures that an appropriate rate is reliably available and precisely identified for converting bets made in foreign currencies. 

It is important to note that the Regulations also addresses the situation where the Bank of Canada does not provide a rate, for example, on Saturday, Sunday or Statutory Holiday and, as such, the “previous day's rate” is unavailable. Paragraph 51(4)(a) of the Regulations clarifies that associations are to use the most recent quoted rate by the Bank of Canada, which for our example will typically be the rate quoted on Friday.

The following illustrates application of the regulatory provision and provides general direction for identifying and using the correct internet source for foreign currency exchange rates.

Part 2 – Instructions for Internet website sources

The following step-by-step instructions for identifying the applicable exchange rate are recommended by CPMA for the promotion of industry consistency and user-friendliness. While the CPMA recognizes that other methods may be used, adherence to these instructions will ensure that the exchange rates are accurately identified and applied in the accordance of subsection 51(4) of the Regulations. 

Bank of Canada

For foreign currency exchange rates found on the Bank of Canada,

Screen capture of Bank of Canada website, statistics link highlighted
Screen capture of Daily Exchange Rates Lookup, highlighted
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This will provide you with a list of daily average exchange rates for all 26 currencies as published at 16:30 Eastern Time (ET) by the Bank of Canada. The list is reviewed every three (3) years by the Bank of Canada and, if necessary, adjusted.

As of the date of this publication, the 26 currencies published by the Bank of Canada are:

  1. Australian dollar
  2. Brazilian real
  3. Chinese renminbi
  4. European euro
  5. Hong Kong dollar
  6. Indian rupee
  7. Indonesian rupiah
  8. Japanese yen
  9. Malaysian ringgit
  10. Mexican peso
  11. New Zealand dollar
  12. Norwegian krone
  13. Peruvian new sol
  14. Russian ruble
  15. Saudi riyal
  16. Singapore dollar
  17. South African rand
  18. South Korean won
  19. Swedish krona
  20. Swiss franc
  21. Taiwanese dollar
  22. Thai baht
  23. Turkish lira
  24. UK pound sterling
  25. US dollar
  26. Vietnamese dong

XE

Where the Bank of Canada site does not provide a foreign currency exchange rate pursuant to paragraph 51(4)(b) of the Regulations, associations shall use the rate of exchange provided at 16:00 UTC (17:00 during Standard Time) listed on the Internet website XE.  It should be noted that unlike the Bank of Canada site, XE provides new currency exchange rates on every day of the week and therefore requires associations to use the previous day exchange rate published on weekends and holidays.

Screen capture of xe.com toolbar with tools, historical currency rates selected
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Screen capture of xe.com currency table, Canadian Dollar (CAD),  with mid-market rates , date, and CAD per unit values selected

Oanda

Where an applicable rate of exchange is not available on the Bank of Canada site, or at XE, the association shall use the rate of exchange provided at the Internet website Oanda. It should be noted that similar to XE, Oanda provides new currency exchange rates daily and therefore requires associations to use the previous day exchange rate published on weekends and holidays.

The Internet site, Oanda has three daily prices listed in their Historical Rates; (that is Bid, Ask and Midpoint prices). These rates are updated and posted daily at 22:00 ET.  

In rare case where Associations must rely on Oanda as a source for currency exchange rates, they should use the midpoint (MID) rate of exchange quoted between those currencies on the Internet at Oanda at 22:00 Eastern Time (ET) on the day before the day on which the post time of the first race of the racing card is scheduled.

Screen capture of oanda.com currency converter, historical rates selected
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Screen capture of OANDA historical rates with the graph icon selected

Part 3 - Rounding Method for Foreign Currency Exchange

Canadian race-course associations that offer inter-track betting into Canada (that is international common pool betting) are required to convert bets made in foreign currency into Canadian currency when calculating the applicable deductions and pay-out prices under the rules described under subsection 51(4) of the Pari-Mutuel Betting Supervision Regulations.

The rule for rounding to two decimal places relies on the value of the third decimal place. That is, if the number in the third decimal place is 5 or higher, then add 1 to the number in the second decimal place. However, if the number in the third decimal place is less than 5, leave the number in the second decimal place as is. After rounding to the second decimal place, all numbers after the second decimal place are omitted. For example, the reported exchange rate of 1.273593 would be rounded to 1.27, because the number in the third decimal place (that is, “3”) is less than 5. Alternatively, a reported exchange rate of 1.278593 would be rounded to 1.28, because the number in the third decimal place (that is, “8”) is greater than 5.

Converting Canadian currency into a foreign currency

While the Pari-Mutuel Betting Supervision Regulations do not explicitly address currency exchange requirements used for converting bets made in Canadian dollars into a pool calculated in a foreign currency, the CPMA will support use of the same rounding method described above, provided this is consistent with the currency exchange method used by the regulator in the pool host's jurisdiction. 

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