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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 2017-12-14. Previous Versions

AMENDMENTS NOT IN FORCE

  • — 2018, c. 12, s. 231

    • 231 The fourth paragraph of the preamble to the Payment Clearing and Settlement Act is replaced by the following:

      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, including by providing for their resolution while minimizing the exposure of public moneys to loss, in order to control risk to the financial system in Canada and promote its efficiency and stability;

  • — 2018, c. 12, s. 232

    • 232 Section 2 of the Act is amended by adding the following in alphabetical order:

      bridge clearing house

      bridge clearing house means a corporation or company that is designated as a bridge clearing house under subsection 11.13(1). (chambre de compensation-relais)

      receiver

      receiver includes a receiver-manager and a sequestrator. (séquestre)

      share

      share includes

      • (a) a conversion or exchange privilege that is convertible at any time into a share; and

      • (b) an option or a right to acquire a share or a privilege referred to in paragraph (a). (action)

  • — 2018, c. 12, s. 233

    • 233 The portion of subsection 8(1) of the Act before paragraph (a) is replaced by the following:

      • Validity, etc.
        • 8 (1) Despite anything in any statute or other law of Canada or a province, but subject to paragraph 11.07(1)(a) and subject to an order made under section 11.11,

  • — 2018, c. 12, s. 234

    • 234 The Act is amended by adding the following after section 10:

      PART I.1Clearing and Settlement System Resolution

      Scope

      • Application

        11 This Part applies in respect of a clearing and settlement system that is designated under subsection 4(1) if its clearing house is located in Canada.

      Resolution Authority

      • Resolution Authority

        11.01 The Bank is the resolution authority for clearing and settlement systems and clearing houses.

      • Objects

        11.02 The objects of the Bank as the resolution authority are to

        • (a) pursue the stability of the financial system in Canada;

        • (b) allow for the continuity of critical clearing and settlement system functions; and

        • (c) pursue the objects set out in paragraphs (a) and (b) in a manner that minimizes the exposure of public moneys to loss.

      • Powers

        11.03 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.

      Committee

      • Membership
        • 11.04 (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.

        • Chairperson

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

        • 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.

        • 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.

        • 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).

        • Conflicts of interest

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

      Resolution Plans

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

        • 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.

      Entry into Resolution

      • Declaration of non-viability
        • 11.06 (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.

        • 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.

        • 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.

        • 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.

        • Publication

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

      • Stay
        • 11.07 (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.

        • 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.

        • 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.

      • Eligible financial contracts
        • 11.08 (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).

        • 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.

        • 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.

        • 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).

        • Definition of financial collateral

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

      Vesting and Receivership

      • Order
        • 11.09 (1) The Governor of the Bank may, after having made a declaration of non-viability for a clearing and settlement system or a clearing house, by order,

          • (a) if the declaration is for the Canadian Payments Association or a clearing and settlement system that it operates, appoint the Bank as receiver in respect of the Association; or

          • (b) in any other case,

            • (i) appoint the Bank as receiver in respect of the clearing house, or

            • (ii) vest in the Bank the shares of the clearing house that are specified in the order.

        • Effect of receivership order

          (2) An order made under paragraph (1)(a) or subparagraph (1)(b)(i) constitutes the Bank as the exclusive receiver of the assets and undertaking of the clearing house and gives the Bank the power to

          • (a) take possession and control of the assets and undertaking and require any person or entity to account for and deliver up to the Bank possession and control of the assets;

          • (b) subject to paragraph (c), sell or otherwise alienate the assets in the manner and on the terms and conditions that the Bank considers appropriate;

          • (c) sell or otherwise alienate any asset that is subject to an agreement creating a security to any person or entity who agrees to assume the obligation secured by the security;

          • (d) arrange for the assumption by any person or entity of all or any part of the clearing house’s liabilities;

          • (e) carry on the business of the clearing house;

          • (f) sue for, defend, compromise and settle, in the name of the clearing house, any claim made by or against it;

          • (g) do all acts and execute or, in Quebec, sign any documents in the name of the clearing house; and

          • (h) do all other things necessary or incidental to the exercise of the Bank’s rights, powers, privileges and immunities as receiver.

        • Effect of vesting order

          (3) An order made under subparagraph (1)(b)(ii)

          • (a) vests in the Bank the shares that are subject to the order, free from any adverse claim, including any claim that a transfer was wrongful or that a particular adverse person or entity was the owner of or had an interest or right in the shares, even though the clearing house knows of the adverse claim;

          • (b) extinguishes any such adverse claim to the extent that the claim is a claim that a person or entity other than the Bank is the owner of or has an interest or right in the shares; and

          • (c) does not extinguish any such adverse claim to the extent that the claim is a personal claim against a person or entity other than the Bank or an assignee or successor of the Bank.

        • For greater certainty — bankruptcy

          (4) For greater certainty, shares that are subject to an order made under subparagraph (1)(b)(ii) and that, immediately before the making of the order, are vested in a trustee in bankruptcy under the Bankruptcy and Insolvency Act are vested in the Bank.

        • For greater certainty — not a Crown corporation

          (5) For greater certainty, the vesting in the Bank of the clearing house’s shares does not cause the clearing house to be a Crown corporation, as defined in subsection 83(1) of the Financial Administration Act.

        • For greater certainty — exercising rights

          (6) For greater certainty, an order made under subsection (1) prevents any person or entity, other than the Bank, who is the holder of shares, debts or other liabilities of the clearing house or who is a party to or a beneficiary of a contract with the clearing house, and any secured creditor or assignee or successor of such a person or entity, from exercising any voting or other rights arising from the person’s or entity’s status in any manner that could defeat or interfere with the rights, powers, privileges and immunities of the Bank as holder of shares or as receiver, as the case may be.

        • Receiver’s powers

          (7) If an order is made under paragraph (1)(a) or subparagraph (1)(b)(i),

          • (a) the Bank, as receiver, may exercise its powers, rights, privileges and immunities without leave of a court, but may seek the assistance of a superior court in exercising those powers, rights, privileges and immunities, including by applying to a superior court for an order requesting assistance from a Canadian or foreign court, tribunal, government authority or regulatory body;

          • (b) an asset of the clearing house that is acquired from the Bank, as receiver, shall, except to the extent that it is an asset referred to in paragraph (2)(c), be acquired free of any adverse claim of the clearing house or any other person or entity; and

          • (c) the Bank, as receiver, may cause or refrain from causing any obligation of the clearing house to be performed and may cause the clearing house to incur an obligation or do so on its behalf.

        • Effect of appointment as receiver

          (8) The Bank shall not, by reason of its appointment as receiver or any action taken by it as receiver, be held to have assumed or incurred any obligation or liability of the clearing house for its own account.

        • Non-liability — employees

          (9) Despite anything in federal or provincial law, the Bank, as receiver, is not liable in respect of an obligation or liability, including one as a successor employer,

          • (a) that is in respect of the employees or former employees of the clearing house or a predecessor of the clearing house or in respect of a pension plan for the benefit of those employees or former employees; and

          • (b) that existed before the Bank’s appointment as receiver or that is calculated by reference to a period before that appointment.

        • Liability of other successor employers

          (10) Subsection (9) does not affect the liability of a successor employer other than the Bank, as receiver.

        • Order and action final

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

        • Notice

          (12) 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 whose clearing house is the subject of the order.

        • Publication

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

      • Transfer of powers to Bank
        • 11.1 (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.

        • 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.

        • 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.

        • 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.

        • 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.

        • 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.

        • 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.

        • 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.

      • Additional powers
        • 11.11 (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.

        • 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.

        • 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.

        • 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.

        • 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).

        • 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.

        • 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.

        • Publication

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

      Bridge Clearing Houses

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

        • 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.

      • Power of Governor of Bank
        • 11.13 (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.

        • 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.

        • 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.

      • Terms and conditions of transactions
        • 11.14 (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.

        • Reasonable consideration

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

      Non-application of Certain Legislative Provisions

      • Canadian Payments Act
        • 11.15 (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.

        • 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.

      • Trust and Loan Companies Act

        11.16 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.

      • Order — Canadian Payments Act
        • 11.17 (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.

        • 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

      • Cost recovery

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

      • Loans to Bank
        • 11.19 (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.

        • 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.

        • 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

      • Exit plan
        • 11.2 (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.

        • 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.

        • 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).

        • 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).

        • Prior approval of Minister

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

      • Restructuring transactions
        • 11.21 (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.

        • 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.

        • 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.

        • 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.

        • 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.

      • Liquidator bound
        • 11.22 (1) The liquidator of a clearing house appointed under the Winding-up and Restructuring Act is bound by the terms and conditions of any transaction that involves the sale or other alienation of the clearing house’s assets or the assumption by a bridge clearing house of any portion of the clearing house’s liabilities and shall carry out those transactions or cause them to be carried out.

        • Expenses

          (2) All costs, charges and expenses properly incurred by the liquidator in complying with the terms and conditions of any transaction referred to in subsection (1), including the liquidator’s remuneration, are payable by the bridge clearing house.

      • Dissolution
      • Notice — end of resolution

        11.24 If the Bank considers that the exit plan has been substantially implemented, it shall cause a notice to that effect to be published in the Canada Gazette. The notice must specify the day on which the clearing and settlement system or clearing house is no longer in resolution.

      Compensation

      • No compensation — Canadian Payments Association

        11.25 If an order is made under paragraph 11.09(1)(a), neither the Canadian Payments Association nor its members are entitled to compensation as a result of the receivership of the Association.

      • Amount of compensation
        • 11.26 (1) If an order is made under paragraph 11.09(1)(b) or subsection 11.11(1), the Bank shall, in accordance with the regulations, determine the amount of compensation, if any, to be paid to a prescribed person or entity.

        • Entitlement to compensation

          (2) A person or entity that was a prescribed person or entity at the time a declaration of non-viability was made is entitled to be paid compensation only if they are in a worse financial position than they would have been if

          • (a) in the case of a clearing house incorporated under the Trust and Loan Companies Act, the clearing house had been liquidated under the Winding-up and Restructuring Act at the time a declaration of non-viability was made; or

          • (b) in all other cases, the clearing house had become bankrupt and been liquidated at the time a declaration of non-viability was made and the measures to address financial loss, shortfalls in liquidity or capital adequacy that were specified in its by-laws or rules, or in an arrangement that relates to the clearing and settlement system, were exhausted.

        • Duty to pay compensation

          (3) The Bank shall pay the compensation and shall decide whether to pay it wholly or partly in cash or wholly or partly in any other form, including shares, that the Bank considers appropriate.

        • Compensation not payable

          (4) No compensation is payable under subsection (1) before the 90th day after the day on which the clearing and settlement system or clearing house is no longer in resolution.

      • Discharge of liability

        11.27 Payment of the compensation by the Bank under section 11.26 discharges the Bank from its obligations under that section and in no case is the Bank under any obligation to see to the proper application in any way of any such payment.

      • Appointment of assessor

        11.28 In the circumstances prescribed by the regulations, the Governor in Council shall, by order, appoint as assessor a judge of a superior court to review a decision made by the Bank under subsection 11.26(1) and determine, in accordance with the regulations, the amount of compensation, if any, to be paid to a prescribed person or entity.

      • Sittings and hearings
        • 11.29 (1) The assessor may sit at any place and shall arrange for the sittings and hearings that may be required.

        • Powers of assessor

          (2) The assessor has all the powers conferred on a commissioner appointed under Part II of the Inquiries Act for the purpose of obtaining evidence under oath or solemn affirmation.

        • Assistance

          (3) The assessor may appoint a person or entity to assist him or her in exercising his or her powers or performing his or her duties and functions.

        • Payment

          (4) Fees and disbursements payable to the person or entity may be included by the assessor in an amount awarded in respect of costs under subsection (5) or (6).

        • Costs payable by Bank

          (5) If the assessor determines that it is just and reasonable that costs in the proceeding before the assessor be awarded to a prescribed person or entity and against the Bank, the amount that the assessor determines to be just and reasonable to award in respect of those costs is payable by the Bank to the prescribed person or entity.

        • Costs payable to Bank

          (6) If the assessor determines that it is just and reasonable that costs in the proceeding before the assessor be awarded to the Bank and against a prescribed person or entity, the amount that the assessor determines to be just and reasonable to award in respect of those costs constitutes a debt payable by the prescribed person or entity to the Bank and may be recovered as such in any court of competent jurisdiction.

      • Decision final

        11.3 A decision made by an assessor appointed under section 11.28 or, subject to that section, by the Bank under subsection 11.26(1), is for all purposes final.

  • — 2018, c. 12, s. 235

    • 235 The Act is amended by adding the following after section 12:

      • Cooperation

        12.01 If a clearing and settlement system is operated by a clearing house that is not located in Canada, the Bank may cooperate with the foreign resolution authority of that clearing house.

  • — 2018, c. 12, s. 236

    • 236 Section 19 of the Act and the heading before it are replaced by the following:

      Statutory Instruments Act

      • Statutory Instruments Act

        19 A designation under subsection 4(1), a directive issued under this Act, a declaration of non-viability made under subsection 11.06(1), a direction given under subsection 11.1(6) or an order made under subsection 11.09(1) or 11.11(1) is not a statutory instrument for the purposes of the Statutory Instruments Act.

  • — 2018, c. 12, s. 237

    • 237 Section 24 of the Act is replaced by the following:

      • Regulations

        24 The Governor in Council may make regulations

        • (a) providing for rules concerning conflicts of interest for the purpose of subsection 11.04(6);

        • (b) respecting resolution plans and the requirement that the Bank develop and maintain them under subsection 11.05(1);

        • (c) respecting what constitutes a service that is critical to the operation of the clearing and settlement system or of the clearing house for the purposes of paragraph 11.07(1)(f);

        • (d) respecting what constitutes a limited clearing member for the purposes of subsection 11.11(4);

        • (e) for the purpose of section 11.18, respecting what constitutes costs of the resolution and the recovery of those costs, including to specify the persons or entities from which costs may be recovered;

        • (f) respecting the compensation for the purposes of sections 11.26 to 11.3, including to

          • (i) prescribe persons or entities referred to in subsection 11.26(1),

          • (ii) provide for the factors that the Bank shall or shall not consider in making a decision under subsection 11.26(1),

          • (iii) provide for the circumstances in which any shares or other right or interest received by another person or entity as a result of an order made under paragraph 11.09(1)(b) or retained by another person or entity may be taken into account in determining the amount of compensation to which a prescribed person or entity is entitled,

          • (iv) prescribe the circumstances in which an assessor must be appointed under section 11.28,

          • (v) provide for the factors that an assessor shall or shall not consider in making a decision, and

          • (vi) provide for procedural requirements; and

        • (g) prescribing collateral for the purpose of paragraph (e) of the definition financial collateral in subsection 13(2).

  • — 2018, c. 12, s. 240

    • 240 Section 2 of the Payment Clearing and Settlement Act is amended by adding the following in alphabetical order:

      oversight information

      oversight information has the meaning assigned by the regulations. (renseignements relatifs à la surveillance)

  • — 2018, c. 12, s. 241

    • 241 The Act is amended by adding the following after section 18:

      • No disclosure

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

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

        • 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.

        • 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.

        • 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.

        • 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).

  • — 2018, c. 12, s. 242

    • 242 Section 24 of the Act is replaced by the following:

      • Regulations

        24 The Governor in Council may make regulations

        • (a) prescribing collateral for the purpose of paragraph (e) of the definition financial collateral in subsection 13(2);

        • (b) respecting what constitutes oversight information for the purposes of sections 18.1 and 18.2;

        • (c) respecting the disclosure of oversight information for the purposes of section 18.1; and

        • (d) respecting the circumstances in which oversight information may be used as evidence for the purposes of subsection 18.2(3).

  • — 2018, c. 12, s. 243

    • 243 On the first day on which both sections 237 and 242 of this Act are in force, section 24 of the Payment Clearing and Settlement Act is replaced by the following:

      • Regulations

        24 The Governor in Council may make regulations

        • (a) providing for rules concerning conflicts of interest for the purpose of subsection 11.04(6);

        • (b) respecting resolution plans and the requirement that the Bank develop and maintain them under subsection 11.05(1);

        • (c) respecting what constitutes a service that is critical to the operation of the clearing and settlement system or of the clearing house for the purposes of paragraph 11.07(1)(f);

        • (d) respecting what constitutes a limited clearing member for the purposes of subsection 11.11(4);

        • (e) for the purpose of section 11.18, respecting what constitutes costs of the resolution and the recovery of those costs, including to specify the persons or entities from which costs may be recovered;

        • (f) respecting the compensation for the purposes of sections 11.26 to 11.3, including to

          • (i) prescribe persons or entities referred to in subsection 11.26(1),

          • (ii) provide for the factors that the Bank shall or shall not consider in making a decision under subsection 11.26(1),

          • (iii) provide for the circumstances in which any shares or other right or interest received by another person or entity as a result of an order made under paragraph 11.09(1)(b) or retained by another person or entity may be taken into account in determining the amount of compensation to which a prescribed person or entity is entitled,

          • (iv) prescribe the circumstances in which an assessor must be appointed under section 11.28,

          • (v) provide for the factors that an assessor shall or shall not consider in making a decision, and

          • (vi) provide for procedural requirements;

        • (g) prescribing collateral for the purpose of paragraph (e) of the definition financial collateral in subsection 13(2);

        • (h) respecting what constitutes oversight information for the purposes of sections 18.1 and 18.2;

        • (i) respecting the disclosure of oversight information for the purposes of section 18.1; and

        • (j) respecting the circumstances in which oversight information may be used as evidence for the purposes of subsection 18.2(3).

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