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

Securities and Derivatives Clearing Houses

Marginal note:Securities and derivatives clearing houses

• 13.1 (1) Nothing in any law relating to bankruptcy or insolvency or in any order of a court made in respect of the administration of a reorganization, arrangement or receivership involving insolvency, including in any foreign law or order of a foreign court, has the effect of

  • (a) preventing a securities and derivatives clearing house from

    • (i) if it is a party to a netting agreement, terminating the agreement and determining a net termination value or net settlement amount in accordance with the provisions of the agreement, with the party entitled to the value or amount becoming a creditor of the party owing the value or amount for that value or amount, or

    • (ii) acting in accordance with any of its rules that provide the basis on which payment and delivery obligations are calculated, netted and settled; or

  • (b) interfering with the rights or remedies of a securities and derivatives clearing house in respect of any collateral that has been granted to it as security for the performance of an obligation incurred in respect of the clearing and settlement services provided by the securities and derivatives clearing house.

• Marginal note:Sections 39.15 and 39.152 of Canada Deposit Insurance Corporation Act

  (1.1) Despite subsection (1), no action may be taken in respect of an eligible financial contract, as defined in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act, if it is prevented by subsection 39.15(7.1), (7.104), (7.11), (7.12) or (7.2) or section 39.152 of that Act.

• Marginal note:Designation by Minister

  (2) For the purpose of this section, the Minister may designate an entity, other than one mentioned in paragraph (a), (b) or (c) of the definition securities and derivatives clearing house in subsection (3), as a securities and derivatives clearing house if

  • (a) the Minister is of the opinion that it is in the public interest to do so; and

  • (b) the entity provides clearing and settlement services to its clearing members in respect of transactions that involve securities or derivatives.

• Marginal note:Definitions

  (3) The definitions in this subsection apply in this section.

  clearing member

  clearing member means a person who uses the services of a securities and derivatives clearing house. (membre)

  net termination value

  net termination value means the net amount obtained after setting off or compensating or otherwise netting the obligations between a securities and derivatives clearing house and a clearing member in accordance with the netting agreement. (reliquat net)

  netting agreement

  netting agreement means an agreement between a securities and derivatives clearing house and a clearing member that is

  • (a) an eligible financial contract; or

  • (b) an agreement that provides for the netting or setting off or compensation of present or future obligations to make payments or deliveries against present or future rights to receive payments or take deliveries. (accord de compensation)

  securities and derivatives clearing house

  securities and derivatives clearing house means, in addition to an entity designated under subsection (2),

  • (a) the Canadian Derivatives Clearing Corporation, incorporated under the Canada Business Corporations Act;

  • (b) the CDS Clearing and Depository Services Inc., a corporation incorporated under the Canada Business Corporations Act; or

  • (c) the WCE Clearing Corporation, incorporated under The Corporations Act, chapter C225 of the Re-enacted Statutes of Manitoba 1987. (chambre spécialisée)

Agreements

Marginal note:Clearing house or participant

13.2 The Bank may enter into an agreement with a clearing house or a participant, or both, in respect of

• (a) netting arrangements;

• (b) risk-sharing and risk-control mecha­nisms;

• (c) certainty of settlement and finality of payment;

• (d) the nature of financial arrangements among participants;

• (e) the operational systems and financial soundness of the clearing house;

• (e.1) the exercise of the Bank’s powers and the performance of its duties and functions; and

• (f) any other matters pertaining to systemic risk or payments system risk.

Marginal note:Cooperation

13.3 The Bank may enter into an agreement or arrangement with any government authority or regulatory body for the purpose of consulting, sharing information and coordinating their actions with respect to clearing and settlement systems.

Information Requirements

Marginal note:Information requests — systems or arrangements

• 14 (1) If the Governor of the Bank has reasonable grounds to believe that a system or arrangement exists for the clearing or settlement of payment obligations or for the exchange of payment messages for the purpose of clearing or settlement of payment obligations but requires further information in order to determine whether the system or arrangement is a clearing and settlement system, the Governor may, with the agreement of the Minister, request a person who is a party to the system or arrangement to provide the Bank with such information and documents regarding the system or arrangement as the Governor may require to make the determination.

• Marginal note:Compliance with request required

  (2) Every person to whom a request is directed under subsection (1) shall comply with the request.

• Marginal note:Risk information

  (3) Every clearing house shall provide the Bank with any information and documents that the Governor of the Bank may require to enable them to determine whether the clearing and settlement system poses a systemic risk or payments system risk, including

  • (a) the names of its participants;

  • (b) copies of its constating documents, by-laws, resolutions, agreements, rules, procedures and other documents governing its establishment and operation;

  • (c) the names of its directors, committee members and auditors;

  • (d) copies of its reports, statements or other documents that are required to be filed with any government authority or regulatory body; and

  • (e) copies of its financial statements.

Enforcement

Marginal note:Compliance orders

• 15 (1) The Bank or the Governor of the Bank may apply to a superior court for an order

  • (a) directing a clearing house or participant to comply with this Act, a directive issued under this Act or an agreement that it has entered into under section 13.2, if the clearing house or participant has failed to comply with this Act, the directive or the agreement, as the case may be;

  • (b) directing a person to comply with a request made under subsection 14(1), if the person has failed to comply with the request; or

  • (c) directing a person to comply with a prohibition or to respect a condition imposed under this Act, if the person has failed to comply with the prohibition or to respect the condition.

• Marginal note:Powers of the court

  (2) The court may make any order referred to in subsection (1) and may also make any further order that it considers appropriate.

Marginal note:Offence and punishment

16 Every person who, without reasonable cause, contravenes any provision of this Act is guilty of an offence and

• (a) in the case of a natural person, liable on summary conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding twelve months, or to both; or

• (b) in the case of any other entity, liable on summary conviction to a fine not exceeding $500,000.

Guidelines

Marginal note:Governor or Bank may issue

17 The Governor of the Bank or the Bank may issue guidelines in respect of any matter relating to the administration or enforcement of this Act.

Disclosure of Information

Marginal note:Information confidential

• 18 (1) Information obtained under this Act is confidential and shall be treated accordingly.

• Marginal note:Disclosure permitted

  (2) Nothing in subsection (1) prevents the Bank from disclosing any information, if the Bank is satisfied that the information will be treated as confidential by the authority, body or person to which it is disclosed,

  • (a) to any government authority or regulatory body charged with the regulation of

    • (i) financial institutions, as defined in section 2 of the Trust and Loan Companies Act, for purposes related to that regulation, or

    • (ii) entities that provide clearing or settlement services in connection with securities transactions or eligible financial contracts, for purposes related to that regulation; and

  • (b) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Chief Executive Officer of the Canada Deposit Insurance Corporation or any other officer of that Corporation authorized in writing by the Chief Executive Officer.

• Marginal note:Disclosure permitted

  (3) Nothing in subsection (1) prevents the Bank from disclosing any information regarding a clearing and settlement system that the Bank has designated under subsection 4(1) to any government authority or regulatory body charged with the regulation of systems or arrangements for the clearing or settlement of payment obligations or for the exchange of payment messages for the purpose of clearing or settlement of payment obligations, for purposes related to that regulation, if the Bank is satisfied that the information will be treated as confidential by the authority or body to which it is disclosed.

• Marginal note:Disclosure outside Canada

  (4) Before the Bank discloses information to a government authority or regulatory body outside Canada, the Bank shall enter into an arrangement or agreement with the authority or body regarding the terms of the disclosure.

Marginal note:No disclosure

18.1 Subject to the regulations, a clearing house shall not disclose oversight information.

Marginal note:Evidentiary privilege

• 18.2 (1) Oversight information shall not be used as evidence in any civil proceedings and is privileged for that purpose.

• Marginal note:No testimony or production

  (2) No person shall by an order of any court, tribunal or other body be required in any civil proceedings to give oral testimony or to produce any document relating to any oversight information.

• Marginal note:Exceptions to subsection (1)

  (3) Despite subsection (1),

  • (a) the Minister, the Governor of the Bank, the Bank or the Attorney General of Canada may, subject to the regulations, use oversight information as evidence in any proceedings; and

  • (b) a clearing house may, subject to the regulations, use oversight information as evidence in any proceedings in relation to the administration or enforcement of this Act, the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act or the Winding-up and Restructuring Act that are commenced by the Minister, the Bank or the Attorney General of Canada.

• Marginal note:Exceptions to subsections (1) and (2)

  (4) Despite subsections (1) and (2), a court, tribunal or other body may, by order, require the Minister, the Governor of the Bank, the Bank or a clearing house to give oral testimony or to produce any document relating to any oversight information in any civil proceedings in relation to the administration or enforcement of this Act that are commenced by the Minister, the Governor of the Bank, the Bank or the Attorney General of Canada.

• Marginal note:No waiver

  (5) The disclosure of any oversight information, other than under subsection (3) or (4), does not constitute a waiver of the privilege referred to in subsection (1).