Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System (SOR/2003-346)

Marginal note:Required approval

• 29 (1) An appointment referred to in section 28 is subject to the approval of the Board.

• Marginal note:Criteria for approval

  (2) The Board may approve the appointment if

  • (a) the appointed member complies with the requirements set out in paragraphs 26(a), (b) and (d); and

  • (b) [Repealed, SOR/2020-167, s. 5]

  • (c) in the case of a group referred to in paragraph 28(1)(b), the appointed member enters into contractual commitments with each of the entities belonging to the group that are necessary to ensure the ability of the member to satisfy its liability as group clearer.

Marginal note:Revocation of status

• 30 (1) The Board may revoke the group clearer status of a member if that member no longer complies with the requirements set out in paragraph 26(a), (b) or (d) or, in the case of a group referred to in paragraph 28(1)(b), the contractual commitments referred to in paragraph 29(2)(c) no longer ensure the ability of the member to satisfy its liability as group clearer.

• Marginal note:Notification of revocation

  (2) The President shall, as soon as practicable, notify all members of the revocation.

31 [Repealed, SOR/2012-161, s. 8]

Marginal note:Exception — Direct Clearer and Group Clearer Exception

32 A qualified corporation, on behalf of its money market mutual fund, a trustee of a qualified trust and a life insurance company are not eligible to be a direct clearer or group clearer.

Marginal note:Clearing agents appointment

• 33 (1) The Board may, on completion by a direct clearer or group clearer of the application procedures set out in the rules, appoint it to act as a clearing agent if the direct clearer or group clearer meets the technical, financial and other requirements set out in the rules.

• Marginal note:Designation of a central

  (2) A group clearer that has been appointed to act as a clearing agent for an indirect clearer may, in accordance with the rules, designate a central that belongs to the group where the settlement account of that indirect clearer is maintained and the loan facility of that indirect clearer is established.

• Marginal note:Effect of designation

  (3) The designation of a central in accordance with subsection (2) by the group clearer appointed to act as a clearing agent does not preclude the group clearer from remaining subject to all obligations applicable to clearing agents set out in this By-law and in the applicable rules.

Marginal note:Revocation of status

• 34 (1) The Board may revoke the clearing agent status of a direct clearer or group clearer that no longer meets the requirements set out in the rules.

• Marginal note:Automatic revocation

  (2) If a member’s status as direct clearer or group clearer is revoked, its status as clearing agent is also revoked.

• Marginal note:Notification of revocation

  (3) The President shall, as soon as practicable, notify all members of the revocation.

Pledging Collateral

Marginal note:Calculation of necessary collateral

• 34.1 (1) The Association shall calculate, in accordance with the rules, the required amount of the ACSS collateral pool and the amount of each direct clearer and group clearer’s collateral pool pledge. The Association shall periodically recalculate these amounts, in accordance with the rules.

• Marginal note:Pledging collateral

  (2) Each direct clearer and group clearer shall pledge collateral to the Bank of Canada, in an amount determined by the Association in accordance with the rules, within the time and in the manner set out in the rules. If the amount of the collateral pool pledge increases as a result of a recalculation under subsection (1), the direct clearer or group clearer shall pledge the recalculated amount, within the time and in the manner set out in the rules.

• Marginal note:Valuation by Bank of Canada

  (3) Any collateral pledged by a direct clearer or group clearer for ACSS purposes is subject to valuation by the Bank of Canada at the time the pledge is made.

• Marginal note:Insufficient collateral

  (4) If, on valuation of the collateral by the Bank of Canada, the value assigned by the Bank of Canada to the collateral pledged is less than the amount that is required to be pledged, the direct clearer or group clearer shall pledge additional collateral.

• Marginal note:Exceeding collateral requirement

  (5) If the value of the direct clearer or group clearer’s collateral pledge exceeds the amount that is required to be pledged, the direct clearer or group clearer shall, on request for a release made to the Bank of Canada, obtain a release of the excess collateral from the pledge.

Marginal note:Restricted purpose

34.2 A direct clearer or group clearer shall not use the collateral pledged under subsection 34.1(2) for any purpose other than securing an advance from the Bank of Canada to enable settlement under section 50.

DIVISION 4Representation

General

Marginal note:Representation of indirect clearers

35 An indirect clearer shall designate at least one clearing agent. However, for those payment items specified in the rules, an indirect clearer shall be represented at every regional exchange point by the same clearing agent.

Marginal note:Amalgamations

• 36 (1) If two members amalgamate, for a period of one year following the amalgamation,

  • (a) payment items, including those not giving rise to clearing through the ACSS, drawn on or payable by the member that ceases to exist, may continue to be exchanged; and

  • (b) in the case of an indirect clearer that ceases to exist, it may be represented at a regional exchange point, despite section 35, by more than one clearing agent for the payment items specified in the rules.

• Marginal note:Extension of period

  (2) The President may extend the one-year period if it is necessary for the proper conduct of the business of the amalgamating members.

Prior to Acting — Clearing Agent

Marginal note:Notice

• 37 (1) Subject to section 41, a clearing agent shall give at least 30 days’ notice to the President prior to acting as clearing agent for an indirect clearer.

• Marginal note:Obligation of President

  (2) The President shall inform the direct clearers and group clearers of the notice in accordance with the rules.

Ceasing to Act — Clearing Agent and Group Clearer

Marginal note:30 days notice

• 38 (1) A clearing agent shall give at least 30 days’ notice to an indirect clearer and to the President prior to ceasing to act as clearing agent for the indirect clearer.

• Marginal note:Obligation of President

  (2) The President shall inform the direct clearers and group clearers of the notice in accordance with the rules.

• Marginal note:Exception

  (3) Despite subsection (1), the clearing agent shall not cease acting for an indirect clearer if another clearing agent is designated to act for the indirect clearer until the other clearing agent has started acting for the indirect clearer.

• Marginal note:Status revoked

  (4) Despite subsections (1) and (3), a clearing agent shall cease to act without delay if its status is revoked.

Marginal note:Exception — ceasing to act immediately

• 39 (1) Subject to subsection 39.15(3.1) of the Canada Deposit Insurance Corporation Act, a clearing agent may, despite subsections 38(1) and (3), immediately cease to act for an indirect clearer if

  • (a) the clearing agent reasonably believes that the indirect clearer poses a legal, financial or operational risk to the clearing agent; or

  • (b) the indirect clearer has breached a substantial term of an agreement entered into with the clearing agent for the purposes of clearing and settlement.

• Marginal note:Notification to other clearing agents

  (2) The clearing agent shall give notice, before the time set out in the rules and at least one hour prior to ceasing to act, to the other clearing agents acting for the indirect clearer. The other clearing agents may unanimously waive the notice or abridge the time for the notice.

• Marginal note:Notification to indirect clearers and group clearers

  (3) The clearing agent shall, immediately on ceasing to act,

  • (a) give written notice to the indirect clearer of its decision to immediately cease to act for the indirect clearer; and

  • (b) give notice of its decision to the President, to its other indirect clearers and to the other clearing agents acting for the indirect clearer and, in so far as is practicable, give notice of its decision to the other direct clearers and group clearers.

• Marginal note:Notice by the President

  (4) The President shall give notice to every other direct clearer and group clearer of the clearing agent’s decision to immediately cease to act for the indirect clearer.

• Marginal note:Notice by direct clearers and group clearers

  (5) Every other direct clearer or group clearer shall immediately notify every indirect clearer for which it acts as clearing agent or every entity belonging to the group for which it acts as group clearer, as the case may be, of that decision.

Marginal note:Obligation to accept payment items

40 A clearing agent that ceases to act for an indirect clearer shall accept payment items, including those not giving rise to clearing through the ACSS, that are drawn on or payable by the indirect clearer and either effect clearing and settlement or make entries into the ACSS until the final exchange on the business day on which the clearing agent ceases to act.

Marginal note:Designation of new clearing agent

• 41 (1) An indirect clearer may, immediately on receiving the notice referred to in subsection 38(1) or 39(3), designate a new clearing agent from among the direct clearers and group clearers appointed by the Board to act as clearing agent.

• Marginal note:When designation takes effect

  (2) The designation takes effect at the time agreed on by the indirect clearer and the new clearing agent.

Marginal note:Duty to cooperate

42 The former and the new clearing agent shall cooperate to ensure an orderly change in representation.

Change to Composition of Group

Marginal note:Notice

43 A group clearer shall, at least 30 days prior to its effective date, give notice to the President of its decision to cease acting as a group clearer for an entity belonging to the group or of the withdrawal of an entity from the group for which it acts as a group clearer.

Marginal note:Exception — immediately ceasing to act

• 43.1 (1) Despite section 43, a group clearer may immediately cease to act for an entity belonging to the group if

  • (a) the group clearer reasonably believes that the entity poses a legal, financial or operational risk to the group clearer; or

  • (b) the entity has breached a substantial term of an agreement entered into with the group clearer for the purposes of clearing and settlement.

• Marginal note:Notice

  (2) The group clearer shall, immediately on ceasing to act,

  • (a) give written notice to the entity of its decision to immediately cease to act for that entity;

  • (b) give notice of its decision to the President;

  • (c) give notice of its decision to the other entities belonging to the group for which it is a group clearer or to every indirect clearer for which it acts as clearing agent, as the case may be; and

  • (d) in so far as is practicable, to give notice of its decision to the direct clearers and other group clearers.

• Marginal note:Notice by the President

  (3) The President shall give notice to the direct clearers and other group clearers of the group clearer’s decision to immediately cease to act for the entity.

• Marginal note:Notice by direct clearers and group clearers

  (4) The direct clearers and other group clearers shall immediately notify every indirect clearer for which they act as a clearing agent or every entity belonging to the group for which they act as a group clearer of that decision.

Marginal note:Obligation to accept payment items

44 The group clearer shall accept payment items, including those not giving rise to clearing through the ACSS, drawn on or payable by an entity for which it is ceasing to act or an entity that withdraws from the group for which it acts as group clearer and either effect clearing and settlement or make entries into the ACSS until the final exchange on the business day on which the group clearer ceases to act or on which the entity withdraws.

DIVISION 5Exchange, Clearing and Settlement

Exchange

Marginal note:Reception of payment items

• 45 (1) A direct clearer, group clearer and clearing agent shall receive payment items at every regional exchange point.

• Marginal note:Use of representative

  (2) A direct clearer, group clearer, clearing agent or the Bank of Canada may exchange payment items through a direct clearer or group clearer, acting on its behalf.

• Marginal note:Responsibility

  (3) The direct clearer, group clearer or clearing agent or the Bank of Canada shall remain responsible to ensure that the payment items are exchanged in accordance with the by-laws and the rules.

Marginal note:Suspension of exchanges

• 46 (1) If it becomes impractical to exchange any class of payment items at a particular regional exchange point on a given day, the President may, after consulting the direct clearers, group clearers and the Bank of Canada, suspend the exchange of the class of payment items or of all payment items for the regional exchange point for the current ACSS cycle.

• Marginal note:Measures

  (2) Immediately on suspension, the President shall, after consulting the direct clearers, group clearers and the Bank of Canada, take any measures that are necessary in the circumstances.

• Marginal note:Notification of measures taken

  (3) The President shall notify the direct clearers, group clearers and the Bank of Canada of the measures taken.