Canadian Payments Association By-law No. 9 — Lynx (SOR/2021-182)

Definitions

Marginal note:Definitions

1 The following definitions apply in this By-law.

Act

Act means the Canadian Payments Act. (Loi)

Bank

Bank means the Bank of Canada. (Banque)

business day

business day has the same meaning as in the Rules. (jour ouvrable)

collateral

collateral means a form of collateral that is identified by the Bank in written communications with members as an acceptable form of security for funds loaned or advanced to the member by the Bank. (garantie)

conditional release mechanism

conditional release mechanism means a mechanism in Lynx in which settlement instructions are temporarily held before being sent to a settlement mechanism or being rejected. (mécanisme de déblocage conditionnel)

entry

entry means, in respect of an entry to a Lynx account or an intraday loan account, an entry on the books of the Bank. (écriture)

finalization window

finalization window means the final window of the payments processing cycle. (période de clôture)

financial message service provider

financial message service provider means a person who, or an entity that, provides an electronic message service that allows members to exchange financial information, but does not include the Association or a member. (fournisseur de service de messagerie financière)

intraday loan

intraday loan means a loan made by the Bank to a participant in accordance with subsection 22(1). (prêt intrajournalier)

intraday loan account

intraday loan account means an account on the books of the Bank that a participant has in Lynx and to which the Association makes entries respecting the making and repayment of the participant’s intraday loan. (compte de prêt intrajournalier)

Lynx

Lynx means the electronic funds transfer system that is owned and operated by the Association. (Lynx)

Lynx account

Lynx account means an account on the books of the Bank that a participant has in Lynx and to which the Association makes entries respecting the settlement of Lynx payment obligations and transfers of funds to and from the account. (compte Lynx)

Lynx operating schedule

Lynx operating schedule means the schedule for Lynx operations that is set out in the Rules. (horaire d’exploitation de Lynx)

Lynx payment obligation

Lynx payment obligation means the obligation of a sending participant to pay a fixed amount to a receiving participant through Lynx. (obligation de paiement de Lynx)

overnight advance

overnight advance means a loan that has a term of one business day, is on the books of the Bank and is made by the Bank to a participant for the purpose of enabling the participant to repay its intraday loan. (avance à un jour)

participant

participant means a member who is approved to participate in Lynx in accordance with this By-law. (participant)

payee

payee means the person, including a receiving participant, to whom the amount specified in a payment message is to be paid or credited, whether or not that person is the ultimate beneficiary of the amount. (bénéficiaire)

payment confirmation reference number

payment confirmation reference number means the alpha-numeric confirmation number that is generated by Lynx to identify a Lynx payment obligation that has been settled through Lynx. (numéro de confirmation du paiement)

payment message

payment message means an electronic message that contains settlement instructions and the information necessary for the receiving participant to make the amount of the payment finally and irrevocably available to the payee. (message de paiement)

payments processing cycle

payments processing cycle means the portion of the Lynx operating schedule during which Lynx payment obligations may be settled through Lynx, including the finalization window. (cycle de traitement des paiements)

pledge

pledge means a grant to the Bank of security in collateral for funds loaned or advanced by the Bank, and it includes the grant of security in which the Bank does not take possession of the collateral. (nantissement)

real-time settlement mechanism

real-time settlement mechanism means the settlement mechanism that is used to make and repay intraday loans and make overnight advances. (mécanisme de règlement en temps réel)

receiving participant

receiving participant means a participant who receives a payment message from another participant. (participant destinataire)

reserved collateral mechanism

reserved collateral mechanism means the settlement mechanism that is used only to settle Lynx payment obligations that are between the Bank and a participant and for which the payee is CDS Clearing and Depository Services Inc., a corporation incorporated under the Canada Business Corporations Act. (mécanisme de garantie réservée)

Rules

Rules means the rules made by the Board respecting Lynx. (règles)

sending participant

sending participant means a participant who sends a payment message to another participant. (participant expéditeur)

settlement instructions

settlement instructions means information contained in a payment message that sets out a Lynx payment obligation and the details necessary for it to be settled through Lynx. (instructions de règlement)

settlement mechanism

settlement mechanism means a mechanism in Lynx that is used to settle Lynx payment obligations. (mécanisme de règlement)

PART 1General

Application

Marginal note:Application

• 2 (1) This By-law applies to the clearing and settlement of payment messages and their associated Lynx payment obligations through Lynx.

• Marginal note:Scope

  (2) Each participant must comply with the provisions of this By-law and the Rules.

• Marginal note:Limitation — rights, liabilities, duties and obligations

  (3) Except as otherwise expressly provided in this By-law or the Rules, nothing in this By-law or the Rules

  • (a) affects the rights and liabilities of a person at law; or

  • (b) imposes, or deems to impose, on a participant or the Association a duty, liability or obligation toward another person.

Association’s Responsibilities

Marginal note:Association responsible for Lynx

• 3 (1) The Association must manage, operate and maintain Lynx and ensure that Lynx is capable of performing all activities and functions required by this By-law and the Rules.

• Marginal note:Association responsible for contractors

  (2) If the Association enters into a contract with another person for the maintenance of Lynx or for performance of an activity or function required by this By-law or the Rules, the Association remains responsible for ensuring that Lynx is capable of performing all activities and functions required by this By-law and the Rules.

Exclusion of Liability

Marginal note:Association and Bank

4 Neither the Association nor the Bank, including their respective directors, officers and employees, is liable for any loss or damage suffered by a member as a result of anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that are intended or authorized to be executed or performed under this By-law or the Rules.

Access to Information

Marginal note:Access provided

5 The Association or a participant, regardless of whether the participant is subject to a suspension under any of sections 8 to 10, may, in accordance with the Rules, access information in Lynx relating to the operation of Lynx.

PART 2Participation in Lynx

Interpretation

Marginal note:Interpretation — participant

6 In sections 8 to 13, a reference to a participant does not include a reference to the Bank.

Application to Be Participant

Marginal note:Application

• 7 (1) A member may, in the form and manner set out in the Rules, make an application to the President to be a participant.

• Marginal note:Approval criteria

  (2) The President must approve the application if the member demonstrates that it has

  • (a) met the technical and testing requirements set out in the by-laws and the Rules;

  • (b) paid the applicable fees set out in the by-laws and the Rules; and

  • (c) in the case of an application by a member other than the Bank,

    • (i) established one Lynx account per settlement mechanism and one intraday loan account, and

    • (ii) entered into agreements with the Bank in respect of those accounts, the provision of intraday loans and overnight advances and the pledging of collateral to secure those loans and advances.

Suspension and Revocation

Suspension

Marginal note:Suspension — access to accounts

8 The President must suspend a participant’s permission to participate in Lynx if the Bank notifies the President that the participant no longer has access to its Lynx accounts or intraday loan account.

Marginal note:Suspension — other

• 9 (1) The President may suspend a participant’s permission to participate in Lynx if

  • (a) the participant no longer meets the technical or testing requirements set out in a by-law or the Rules; or

  • (b) the participant fails to pay an applicable fee set out in a by-law or the Rules.

• Marginal note:Prior notice to Bank

  (2) Before making a suspension, the President must provide the Bank with notice of the intention to make the suspension.

Marginal note:Suspension — exceptional circumstances

• 10 (1) If an agent of Her Majesty in right of Canada, an agent or mandatary of Her Majesty in right of a province, a regulator or a supervisory body takes control of a participant or any of its assets or makes a declaration that a participant is considered to be no longer viable or that a participant is unable to meet its liabilities as they become due, the President may, after being advised of such an action having been taken or such a declaration having been made and with the concurrence of the Minister and the Governor of the Bank, suspend the participant’s permission to participate in Lynx if its further participation could adversely affect the efficiency, safety or soundness of Lynx.

• Marginal note:Reinstatement

  (2) The President may reinstate the participant’s permission to participate in Lynx if, with the concurrence of the Minister and the Governor of the Bank, the President determines that the participant’s further participation in Lynx will not adversely affect the efficiency, safety or soundness of Lynx.

Marginal note:Notice to participants

11 After making a suspension under this By-law, the President must

• (a) without delay, notify the participant that its permission to participate in Lynx is suspended; and

• (b) as soon as feasible, notify all other participants of the suspension.

Revocation

Marginal note:Revocation by Board

• 12 (1) The Board may revoke a member’s approval to be a participant in Lynx if the participant

  • (a) no longer has access to its Lynx accounts or intraday loan account; or

  • (b) no longer meets the technical or testing requirements set out in a by-law or the Rules.

• Marginal note:Prior notice to Bank

  (2) Before making a revocation, the Board must provide the Bank with notice of the intention to make the revocation.

• Marginal note:Notice by President

  (3) After the Board makes a revocation, the President must

  • (a) without delay, notify the member of the revocation; and

  • (b) as soon as feasible, notify all participants of the revocation.

Reinstatement

Marginal note:Application

• 13 (1) A participant who has had its permission to participate in Lynx suspended under section 8 or 9 or a member who has had its approval to be a participant in Lynx revoked under section 12 may, in the form and manner set out in the Rules, make an application to the President to have that permission or approval reinstated.

• Marginal note:Reinstatement

  (2) The President must reinstate the permission or approval if the application demonstrates that the circumstances giving rise to the suspension or revocation no longer exist.

Withdrawal

Marginal note:Notice of withdrawal

14 A participant may cease to be a participant in Lynx by providing a notice of withdrawal to the President in the form and manner set out in the Rules.

PART 3Lynx Operations

General

Marginal note:Operate accounts

15 The Association must operate the following accounts in Lynx on behalf of the Bank:

• (a) for each participant, one Lynx account per settlement mechanism; and

• (b) for each participant other than the Bank, one intraday loan account.

Marginal note:Operate every business day

• 16 (1) Lynx must operate every business day and in accordance with the Lynx operating schedule.

• Marginal note:Lynx access

  (2) All participants whose permission to participate in Lynx is not suspended must be provided with access to Lynx every business day, including access to all settlement mechanisms.

Marginal note:Connecting to Lynx required

17 All participants whose permission to participate in Lynx is not suspended must connect to Lynx every business day unless technical difficulties prevent them from connecting.

Liquidity

Collateral

Marginal note:Pledge and assessment

• 18 (1) Each participant other than the Bank must pledge collateral and the Bank must, before the beginning of the payments processing cycle every business day, assess the value of that collateral.

• Marginal note:Allocation

  (2) Before the beginning of the payments processing cycle every business day, each participant other than the Bank must allocate all or part of the assessed value of its pledged collateral as security for its intraday loan.

• Marginal note:Change to allocation

  (3) A participant may change the allocation of collateral any time before the beginning of the finalization window. However, the assessed value of the allocated collateral must not be less than the outstanding amount of the participant’s intraday loan at the time the change is made.

• Marginal note:Limit on reassessment

  (4) During the period beginning when the credit limit established for a participant under paragraph 19(1)(a) is provided to the Association and ending when the payments processing cycle ends, the Bank must not reassess the value of the collateral allocated by the participant.