Payment Clearing and Settlement Act (S.C. 1996, c. 6, Sch.)

Act current to 2014-10-27 and last amended on 2012-12-14. Previous Versions

Payment Clearing and Settlement Act

S.C. 1996, c. 6, Sch.

Assented to 1996-07-31

An Act respecting the regulation of systems for the clearing and settlement of payment obligations

[Enacted as the Schedule to 1996, c. 6, in force July 31, 1996, see SI/96-58.]
Preamble

Whereas Parliament recognizes that the stability of the financial system in Canada and the maintenance of efficient financial markets are important to the health and strength of the national economy;

Whereas systems established for the clearing and settlement of payment obligations among financial institutions are an essential element of the financial system in Canada and must be properly designed and operated in order to control risk to the financial system in Canada and contribute to its stability;

Whereas the Bank of Canada, in promoting the economic and financial welfare of Canada, takes actions to promote the efficiency and stability of the Canadian financial system, including providing the means of settlement of Canadian dollar payments, acting as lender of last resort and, in consultation with other central banks, developing and implementing standards and practices to recognize and manage risk associated with systems for clearing and settling payment obligations;

And whereas Parliament recognizes that it is desirable and in the national interest to provide for the supervision and regulation of such clearing and settlement systems in order to control risk to the financial system in Canada and promote its efficiency and stability;

NOW, THEREFORE, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

 This Act may be cited as the Payment Clearing and Settlement Act.

INTERPRETATION

Marginal note:Definitions

 The following definitions apply in this Act.

“Bank”

« banque »

“Bank” means the Bank of Canada;

“Canadian participant”

« participant canadien »

“Canadian participant” means a participant that is incorporated or formed under an enactment of Canada or a province.

“central counter-party”

« intermédiaire »

“central counter-party” means a corporation, association, partnership, agency or other entity in a clearing and settlement system with whom all participant’s payment rights and obligations are netted to produce a single amount owing as between each participant and the central counter-party;

“clearing and settlement system”

« système de compensation et de règlement »

“clearing and settlement system” means a system or arrangement for the clearing or settlement of payment obligations or payment messages in which

  • (a) there are at least three participants, at least one of which is a Canadian participant and at least one of which has its head office in a jurisdiction other than the jurisdiction where the head office of the clearing house is located;

  • (b) clearing or settlement is all or partly in Canadian dollars; and

  • (c) except in the case of a system or arrangement for the clearing or settlement of derivatives contracts, the payment obligations that arise from clearing within the system or arrangement are ultimately settled through adjustments to the account or accounts of one or more of the participants at the Bank.

For greater certainty, it includes a system or arrangement for the clearing or settlement of securities transactions, derivatives contracts, foreign exchange transactions or other transactions if the system or arrangement also clears or settles payment obligations arising from those transactions.

“clearing house”

« chambre de compensation »

“clearing house” means a corporation, association, partnership, agency or other entity that provides clearing or settlement services for a clearing and settlement system. It includes a securities and derivatives clearing house, as defined in subsection 13.1(3), but does not include a stock exchange or the Bank.

“eligible financial contract”

« contrat financier admissible »

“eligible financial contract” has the same meaning as in subsection 22.1(2) of the Winding-up and Restructuring Act;

“Minister”

« ministre »

“Minister” means the Minister of Finance;

“participant”

« établissement participant »

“participant” means a member of a clearing house or a party to an arrangement that establishes a clearing and settlement system;

“systemic risk”

« risque systémique »

“systemic risk” means the risk that the inability of a participant to meet its obligations in a clearing and settlement system as they become due or a disruption to a clearing and settlement system could, through the transmittal of financial problems through the system, cause

  • (a) other participants in the clearing and settlement system to be unable to meet their obligations as they become due,

  • (b) financial institutions in other parts of the Canadian financial system to be unable to meet their obligations as they become due, or

  • (c) the clearing and settlement system’s clearing house or the clearing house of another clearing and settlement system within the Canadian financial system to be unable to meet its obligations as they become due.

  • 1996, c. 6, s. 162 (Sch., s. 2);
  • 2007, c. 29, s. 110;
  • 2012, c. 5, s. 213, c. 31, s. 168.