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

Act current to 2022-07-25 and last amended on 2021-06-29. Previous Versions

PART I.1Clearing and Settlement System Resolution (continued)

Vesting and Receivership (continued)

Marginal note:Transfer of powers to Bank

  •  (1) If an order is made under subsection 11.09(1), the powers, duties, functions, rights and privileges of the directors of the clearing house and those of its officers who are responsible for its management are suspended except to the extent that is specified in writing by the Bank. The Bank may exercise those powers, rights and privileges and perform those duties and functions.

  • Marginal note:Suspension of members’ rights

    (2) If an order is made under paragraph 11.09(1)(a), the rights of the members of the Canadian Payments Association to vote or give approvals are suspended and the Bank may exercise those rights.

  • Marginal note:Suspension of shareholders’ rights

    (3) If an order is made under subparagraph 11.09(1)(b)(ii) in respect of a clearing house, the powers, rights and privileges of its shareholders to vote or give approvals are suspended and the Bank may exercise those powers, rights and privileges.

  • Marginal note:Assistance

    (4) The Bank may appoint one or more persons or entities to assist it in managing the clearing house or in carrying out the Bank’s functions as shareholder or as receiver and may delegate to those persons any of the powers, duties or functions of the directors and officers of the clearing house.

  • Marginal note:Power to appoint and remove

    (5) If an order is made under subsection 11.09(1), the Bank may appoint or remove any director of the clearing house.

  • Marginal note:Bank’s directions

    (6) If an order is made under subsection 11.09(1), the Bank may give directions to the board of directors of the clearing house, including directions to make, amend or repeal any by-law, agreement, rule, procedure, guide or other documentation governing the designated clearing and settlement system or the clearing house.

  • Marginal note:Implementation

    (7) The board of directors of the clearing house shall ensure that a direction given under subsection (6) is implemented in a prompt and efficient manner and shall, after implementing a direction, notify the Bank without delay that it has been implemented.

  • Marginal note:By-laws — board of directors

    (8) The board of directors of the clearing house may, with the prior approval of the Bank, make, amend or repeal any by-law of the clearing house.

Marginal note:Additional powers

  •  (1) If the Governor of the Bank has made an order under subsection 11.09(1), the Governor may, by order,

    • (a) require any participant to make a contribution of cash or cash equivalents to the clearing house within a specified time;

    • (b) reduce the amount of a variation margin gain returnable to a participant;

    • (c) require any participant to make a contribution to the clearing house’s default fund within a specified time;

    • (d) transfer a contract between the clearing house or the central counter-party and a participant to another participant;

    • (e) terminate or liquidate a contract, in whole or in part, between the clearing house or the central counter-party and a participant;

    • (f) write-down fully or partially the equity of the shareholders, partners or owners of the clearing house; or

    • (g) take any measures that the Governor of the Bank considers necessary to allocate among the participants the amount of the shortfall due to the clearing house.

  • Marginal note:Condition precedent

    (2) The Governor of the Bank shall only make an order under subsection (1) if the Governor is of the opinion that the order is necessary for the stability of the financial system in Canada.

  • Marginal note:Effect of transfer of contract

    (3) If a contract is transferred under paragraph (1)(d), the Bank shall transfer all of

    • (a) the clearing house’s or the central counter-party’s obligations arising from the contract; and

    • (b) the clearing house’s or the central counter-party’s interest or right in property that secures its obligations under the contract.

  • Marginal note:Non-application

    (4) An order made under any of paragraphs (1)(a) to (e) or (g) does not apply in respect of a participant that is a limited clearing member within the meaning of the regulations.

  • Marginal note:For greater certainty

    (5) For greater certainty, an order is not necessary for any of the actions described under subsection (1) if those actions are provided for under the settlement rules as defined in subsection 8(5).

  • Marginal note:Order and action final

    (6) An order made under subsection (1) and any action taken or decision made in furtherance of the order are for all purposes final.

  • Marginal note:Notice

    (7) After an order is made under subsection (1), the Governor of the Bank shall, without delay, notify

    • (a) the Minister;

    • (b) the committee established under subsection 11.04(1);

    • (c) the clearing house; and

    • (d) any government authority or regulatory body that has entered into an agreement or arrangement with the Bank under section 13.3 related to the clearing and settlement system.

  • Marginal note:Publication

    (8) The Governor of the Bank shall cause a copy of the order to be published in the Canada Gazette.

Bridge Clearing Houses

Marginal note:Request to Minister

  •  (1) The Governor of the Bank may request the Minister to issue letters patent incorporating a company under the Trust and Loan Companies Act.

  • Marginal note:Order to commence and carry on business

    (2) The Superintendent of Financial Institutions shall, without delay after the letters patent are issued, make an order approving the commencement and carrying on of business by the company.

Marginal note:Power of Governor of Bank

  •  (1) If the Bank is the sole shareholder, the Governor of the Bank may designate as a bridge clearing house a corporation incorporated under the Canada Business Corporations Act or a company referred to in section 11.12.

  • Marginal note:Termination of designation

    (2) A corporation’s or company’s designation as a bridge clearing house terminates if

    • (a) the Bank is no longer the sole shareholder; or

    • (b) the corporation or company is amalgamated with a body corporate that is not a bridge clearing house.

  • Marginal note:For greater certainty — not a Crown corporation

    (3) For greater certainty, a bridge clearing house is not a Crown corporation, as defined in subsection 83(1) of the Financial Administration Act.

Marginal note:Terms and conditions of transactions

  •  (1) If the Bank, as receiver for a clearing house, carries out a transaction with a bridge clearing house, the Bank shall establish the terms and conditions of the transaction, including

    • (a) which assets the bridge clearing house shall acquire and the consideration to be paid for them; and

    • (b) which liabilities the bridge clearing house shall assume and the consideration to be paid for them.

  • Marginal note:Reasonable consideration

    (2) The consideration referred to in paragraph (1)(a) shall be reasonable in the circumstances.

Non-application of Certain Legislative Provisions

Marginal note:Canadian Payments Act

  •  (1) The application of sections 4.1, 8 to 16.1, 19.2, 19.3, 20 and 22 to 25 of the Canadian Payments Act is suspended while the Canadian Payments Association is in resolution.

  • Marginal note:Canadian Payments Association rules

    (2) If an exit plan is approved by the Minister, the changes to the rules included in the exit plan under subsection 11.2(4) are not subject to section 19.2 of the Canadian Payments Act.

Marginal note:Trust and Loan Companies Act

 Sections 375, 375.1, 376, 379 and 396 and subsection 399(2) of the Trust and Loan Companies Act do not apply in respect of:

  • (a) a clearing house incorporated under that Act that is in resolution; or

  • (b) a bridge clearing house incorporated under that Act.

Marginal note:Order — Canadian Payments Act

  •  (1) If an order is made under paragraph 11.09(1)(a), the Governor in Council may, by order, suspend the application of any provision of Part 1 of the Canadian Payments Act until the day on which the clearing and settlement system or clearing house is no longer in resolution.

  • Marginal note:Order — other Acts

    (2) The Governor in Council may, by order, exempt a clearing house that is in resolution or a bridge clearing house from the application of any provision of the Trust and Loan Companies Act or the Canada Business Corporations Act or the regulations made under them. The order ceases to be in effect on the day on which, as the case may be,

    • (a) the clearing house is no longer in resolution; or

    • (b) the designation of the corporation as a bridge clearing house terminates.

Funding

Marginal note:Cost recovery

 The Bank may, in accordance with the regulations, recover the costs of the resolution of a clearing and settlement system or a clearing house.

Marginal note:Loans to Bank

  •  (1) At the request of the Governor of the Bank, the Minister may, out of the Consolidated Revenue Fund, lend money to the Bank, on the terms and conditions specified by the Minister, for the purpose of assisting the Bank in carrying out its objects as the resolution authority.

  • Marginal note:Total indebtedness

    (2) The total principal indebtedness outstanding at any time in respect of borrowings under subsection (1) shall not exceed $3,200,000,000.

  • Marginal note:Fees for borrowing

    (3) The Minister may fix a fee to be paid by the Bank to the Receiver General in respect of any borrowings by the Bank and the Minister shall notify the Bank in writing of any such fee.

End of Resolution

Marginal note:Exit plan

  •  (1) For a clearing and settlement system or clearing house that is in resolution, the Bank shall, as soon as feasible, develop an exit plan to end resolution.

  • Marginal note:Consultation

    (2) In developing the exit plan for a clearing and settlement system or a clearing house, the Bank shall consult with the committee established under subsection 11.04(1) and any government authority or regulatory body that has entered into an agreement or arrangement with the Bank under section 13.3 related to that clearing and settlement system.

  • Marginal note:Contents of plan

    (3) The exit plan shall contain, among other things

    • (a) the expected timeline for implementation of the plan;

    • (b) all proposed transactions to restructure the clearing house;

    • (c) the recovery of the costs of the resolution; and

    • (d) the repayment schedule of any loan made under subsection 11.19(1).

  • Marginal note:Canadian Payments Association rules

    (4) In the case of the Canadian Payments Association, the exit plan shall also include any change to the rules made under subsection 19(1) of the Canadian Payments Act since the order was made under paragraph 11.09(1)(a).

  • Marginal note:Prior approval of Minister

    (5) The exit plan shall not be implemented unless it has been approved by the Minister.

Marginal note:Restructuring transactions

  •  (1) If an order is made under paragraph 11.09(1)(a), the Bank may, in accordance with the exit plan and for the purpose of restructuring the business of the Canadian Payments Association, sell or otherwise alienate all or part of the Association’s assets or carry out any transaction that provides for the assumption by another person or entity of all or part of its liabilities.

  • Marginal note:Restructuring transactions — receivership order

    (2) If an order is made under subparagraph 11.09(1)(b)(i), the Bank may, in accordance with the exit plan and for the purpose of restructuring the business of the clearing house, carry out any transaction, including a transaction that involves the sale or other alienation of all or part of the clearing house’s assets or the assumption by another person or entity of all or part of its liabilities.

  • Marginal note:Restructuring transactions — vesting order

    (3) If an order is made under subparagraph 11.09(1)(b)(ii) the Bank may, in accordance with the exit plan and for the purpose of restructuring the business of the clearing house, carry out any transaction, including a transaction that involves

    • (a) the sale or other alienation of all or part of the shares of the clearing house;

    • (b) the amalgamation of the clearing house;

    • (c) the sale or other alienation by the clearing house of all or part of its assets; or

    • (d) the assumption by another person or entity of all or part of the clearing house’s liabilities.

  • Marginal note:Restrictions inapplicable

    (4) No restriction on the rights of the clearing house, including the right to amalgamate, to sell or otherwise alienate any of its assets or to provide for the assumption of any of its liabilities, other than a restriction provided for in an Act of Parliament, applies so as to prevent the Bank or the clearing house from carrying out a transaction referred to in this section.

  • Marginal note:Transfer of liabilities

    (5) Any person or entity who assumes an obligation or liability of the clearing house under a transaction referred to in any of subsections (1) to (3) becomes liable — instead of the clearing house — in respect of the obligation or liability.

 
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