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

Act current to 2019-08-28 and last amended on 2019-06-23. Previous Versions

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

Resolution Authority (continued)

Marginal note:Powers

 While a clearing and settlement system or a clearing house is in resolution, the Bank may, despite paragraphs 23(a), (c) and (d) of the Bank of Canada Act, do all things necessary or incidental to carrying out its objects as the resolution authority, including

  • (a) acquire assets from a clearing house;

  • (b) make or guarantee loans or advances, with or without security, to a clearing house or a participant on the terms and conditions specified by the Bank;

  • (c) assume liabilities of a clearing house;

  • (d) act as receiver of a clearing house, when appointed by order under subsection 11.09(1);

  • (e) acquire, by way of security or otherwise, shares of a clearing house and hold and alienate those shares;

  • (f) acquire, hold and alienate real and personal property or immovable or movable property; and

  • (g) incorporate a corporation under the Canada Business Corporations Act for the purpose of designating the corporation as a bridge clearing house.

  • 2018, c. 12, s. 234

Committee

Marginal note:Membership

  •  (1) There is established a committee consisting, subject to subsection (6), of the following persons:

    • (a) the Governor of the Bank;

    • (b) the Superintendent of Financial Institutions;

    • (c) the Chief Executive Officer of the Canada Deposit Insurance Corporation; and

    • (d) the Deputy Minister of Finance.

  • Marginal note:Chairperson

    (2) The Governor of the Bank is the chairperson of the committee.

  • Marginal note:Object

    (3) The object of the committee is to facilitate consultations and the exchange of information among its members on all matters relating to the resolution of clearing and settlement systems and clearing houses.

  • Marginal note:Consultation

    (4) In carrying out its object, the committee may consult with any government authority or regulatory body that has entered into an agreement or arrangement with the Bank under section 13.3.

  • Marginal note:Information confidential

    (5) Information received by any member of the committee in carrying out the committee’s object is confidential and shall be treated accordingly. The Governor of the Bank may disclose that information to the Bank and the Bank may in turn disclose it to a person or entity in accordance with subsections 18(2) to (4).

  • Marginal note:Conflicts of interest

    (6) The members of the committee shall comply with rules concerning conflicts of interest provided for in the regulations.

  • 2018, c. 12, s. 234

Resolution Plans

Marginal note:Resolution plans

  •  (1) The Bank shall develop and maintain, in accordance with the regulations, a resolution plan for each clearing and settlement system.

  • Marginal note:Consultation

    (2) In developing the resolution plan, 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 the clearing and settlement system.

  • 2018, c. 12, s. 234

Entry into Resolution

Marginal note:Declaration of non-viability

  •  (1) The Governor of the Bank may make a declaration in writing of non-viability for a clearing and settlement system or a clearing house and enter it into resolution if the Governor is of the opinion that

    • (a) the clearing and settlement system or clearing house has ceased, or is about to cease, to be viable; and

    • (b) the clearing and settlement system or clearing house cannot restore or preserve its viability on its own initiative.

  • Marginal note:Matters to consider

    (2) The Governor of the Bank, in determining whether to make a declaration under subsection (1), shall take into account all matters that the Governor considers relevant, including whether, in his or her opinion,

    • (a) the clearing house has exhausted the measures to address financial loss, shortfalls in liquidity or capital adequacy that are specified in its by-laws or rules, or in an arrangement that relates to the clearing and settlement system;

    • (b) the measures described in paragraph (a) will not be sufficient to sustain the operation of the clearing and settlement system or the clearing house;

    • (c) the clearing and settlement system or the clearing house has lost the confidence of the participants; and

    • (d) systemic risk or payments system risk is, or is likely to be, inadequately controlled.

  • Marginal note:Notice

    (3) After a declaration of non-viability is made with respect to a clearing and settlement system or a clearing house, 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 or related to the system whose clearing house is the subject of the declaration.

  • Marginal note:Bankruptcy, default or insolvency

    (4) A declaration of non-viability does not constitute an act of bankruptcy or default by the clearing house, and the clearing house shall not be considered insolvent by reason only of a declaration of non-viability.

  • Marginal note:Publication

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

  • 2018, c. 12, s. 234

Marginal note:Stay

  •  (1) Despite subsection 8(3), a declaration of non-viability shall have the effect of a stay and, during the period of the stay,

    • (a) no person or entity shall terminate or amend any contract with the clearing house or the central counter-party or claim an accelerated payment, or forfeiture of the term, under such a contract by reason only of the making of a declaration of non-viability;

    • (b) no action or other civil proceeding before a judicial or quasi-judicial body and no arbitration may be commenced or continued against the clearing house or in respect of its assets other than a proceeding under the Winding-up and Restructuring Act commenced by the Bank or the Attorney General of Canada;

    • (c) no attachment, garnishment, execution, seizure or other method of enforcement of a judgment or order against the clearing house or its assets may take place or continue;

    • (d) no creditor of the clearing house has any remedy against the clearing house or its assets;

    • (e) except in the normal course of clearing and settlement processes, including the consolidation of accounts in respect of those processes, no creditor has any right of set-off or compensation against the clearing house; and

    • (f) no early termination right or right to amend a contract in respect of a service that is provided to the clearing house and that is critical to the operation of the clearing and settlement system or of the clearing house may be exercised by a service provider.

  • Marginal note:Period of stay

    (2) The period of the stay begins at the time a declaration of non-viability is made and ends on the day specified in the notice referred to in section 11.24.

  • Marginal note:No force or effect

    (3) During the period of the stay, any notice given that a person or entity proposes to take an action referred to in paragraph (1)(a) is of no force or effect.

  • 2018, c. 12, s. 234

Marginal note:Eligible financial contracts

  •  (1) Nothing in subsection 11.07(1) prevents the following actions from being taken in accordance with the provisions of an eligible financial contract, as defined in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act:

    • (a) the termination or amendment of the contract;

    • (b) the accelerated payment or forfeiture of the term under the contract;

    • (c) the exercise of remedies for a failure to satisfy an obligation under or in connection with the contract, including the payment of an amount payable — or the delivery of property deliverable — under or in connection with the contract;

    • (d) the netting or setting off or compensation of an amount payable under or in connection with the contract;

    • (e) any dealing with financial collateral

      • (i) to satisfy an amount payable — or the delivery of property deliverable — under or in connection with the contract,

      • (ii) for the purpose of calculating an amount payable under or in connection with the contract by way of netting, setting off or compensation of the financial collateral or application of the proceeds or value of the financial collateral, or

      • (iii) as a remedy for a failure described in paragraph (c); or

    • (f) any dealing with financial collateral, other than a dealing set out in paragraph (e).

  • Marginal note:Interpretation

    (2) For the purposes of paragraphs (1)(e) and (f), dealings with financial collateral include

    • (a) the sale or foreclosure or, in Quebec, the surrender of financial collateral; and

    • (b) the netting, setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

  • Marginal note:Stay — eligible financial contracts

    (3) During the period that begins at the time a declaration of non-viability is made and ends on the expiration of the second day following the day on which the declaration is made, the actions referred to in paragraphs (1)(a), (b) and (f) are not to be taken by reason only of the making of a declaration of non-viability.

  • Marginal note:Agreements overridden

    (4) Any provision in an eligible financial contract is of no force or effect if the provision has the effect of providing for or permitting anything that, in substance, is contrary to subsection (3).

  • Marginal note:Definition of financial collateral

    (5) In this section, financial collateral has the same meaning as in subsection 13(2).

  • 2018, c. 12, s. 234
 
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