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

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.

Credit Limit

Marginal note:Credit limit established

• 19 (1) Before the beginning of the payments processing cycle every business day, the Bank must

  • (a) for each participant referred to in subsection 18(2), establish a credit limit that is equal to the assessed value of the collateral allocated by the participant; and

  • (b) provide the credit limit to the Association.

• Marginal note:New credit limit

  (2) If a participant changes its allocation in accordance with subsection 18(3), the Bank must establish a new credit limit for that participant in accordance with paragraph (1)(a) and provide it to the Association.

Funding Settlement Mechanisms

Marginal note:Minimum amount of funds

20 Before the beginning of the payments processing cycle on a business day, the Association may, in accordance with the Rules, set the minimum amount of funds that a participant other than the Bank must apportion to a settlement mechanism under subsection 21(1).

Marginal note:Apportion funds

• 21 (1) For the purpose of funding the settlement of Lynx payment obligations in a settlement mechanism, a participant other than the Bank may — within the period before the finalization window set out in the Rules and in accordance with the procedures set out in the Rules — apportion an amount of funds from its credit limit to its Lynx account for that settlement mechanism.

• Marginal note:Minimum

  (2) However, if the Association establishes a minimum amount of funds to be apportioned to a settlement mechanism, the participant must apportion an amount of funds from its credit limit to its Lynx account for that mechanism that is no less than the minimum established.

Intraday Loan

Marginal note:Bank makes intraday loan

• 22 (1) Every business day, the Bank must make an intraday loan to each participant that is equal to the total amount of funds apportioned to all settlement mechanisms by the participant under subsection 21(1).

• Marginal note:Instructions to repay intraday loan

  (2) A participant may, within the period before the finalization window set out in the Rules, instruct the Association to repay all or part of its intraday loan by transferring funds from any of its Lynx accounts to its intraday loan account.

• Marginal note:Outstanding amount of intraday loan

  (3) For greater certainty, the outstanding amount of a participant’s intraday loan is, at any given time in the payments processing cycle, equal to the amount of the intraday loan made under subsection (1) less the amount of any repayments made in accordance with repayments instructed under subsection (2).

• Marginal note:Transfers and entries

  (4) The Association must

  • (a) transfer the amount apportioned to a settlement mechanism by a participant under subsection 21(1) to the Lynx account for that settlement mechanism;

  • (b) subject to subsection 24(3), make the transfers from the participant’s Lynx account to its intraday loan account to reflect any repayment instructed under subsection (2); and

  • (c) make the corresponding entries to those accounts in accordance with the procedures set out the Rules.

Marginal note:Participant’s instructions

• 23 (1) A participant may, within the period before the finalization window set out in the Rules, instruct the Association to transfer funds between any of its Lynx accounts — other than its account for the reserved collateral mechanism — if the transfer will not result in a negative balance in any of those accounts.

• Marginal note:Transfers and entries

  (2) Subject to subsection 24(3), the Association must

  • (a) make the transfer as instructed; and

  • (b) make the corresponding entries to those Lynx accounts in accordance with the procedures set out in the Rules.

Marginal note:Direction by Bank to repay

• 24 (1) If directed by the Bank, the Association must

  • (a) make the partial repayment of a participant’s intraday loan before the finalization window begins by transferring the funds in the participant’s Lynx account for the reserved collateral mechanism to its intraday loan account; and

  • (b) make the corresponding entries to those accounts in accordance with the procedures set out in the Rules.

• Marginal note:Condition

  (2) The Bank must not make a direction other than for a reason specified in the Rules.

• Marginal note:Instruction to repay or transfer

  (3) If a direction is made under subsection (1), any repayment or transfer instructed by the participant under subsection 22(2) or 23(1) may be effected by the Association only after the partial repayment of the intraday loan has been made.

Liquidity for Lynx Payment Obligations

Marginal note:Liquidity available

25 At any time, the total amount of liquidity available to a participant to settle Lynx payment obligations is equal to the amount calculated in accordance with the following formula:

Payment Messages

Marginal note:Payment items

26 For the purpose of the definition payment item in subsection 2(1) of the Act, payment messages are a class of payment items.

Marginal note:Sending payment messages

• 27 (1) A participant may, in accordance with the procedures set out in the Rules, send a payment message to another participant for the settlement of a Lynx payment obligation through Lynx.

• Marginal note:Designation of settlement mechanism

  (2) The participant must designate in the payment message the settlement mechanism that is to be used.

Settlement

Marginal note:Financial message service provider

28 The Association must arrange for a financial message service provider to extract settlement instructions from payment messages, send those settlement instructions to Lynx and provide participants with payment messages and payment confirmation reference numbers.

Marginal note:Extraction of settlement instructions by participant

29 A sending participant may extract the settlement instructions from a payment message and send them to Lynx if, as a result of technical difficulties,

• (a) the financial message service provider is unable to receive the payment message or extract the settlement instructions; or

• (b) the sending participant is unable to send the payment message to the financial message service provider.

Marginal note:Settlement instructions sent to settlement mechanism

• 30 (1) Immediately after receiving settlement instructions, Lynx must send them to the settlement mechanism designated under subsection 27(2).

• Marginal note:Exceptions

  (2) Despite subsection (1), the settlement instructions must

  • (a) be sent to the conditional release mechanism if

    • (i) the sending participant has directed that transfer of the amount specified in the settlement instructions is to occur at a specific time later in the payments processing cycle,

    • (ii) the sending participant or receiving participant is temporarily unable to settle the Lynx payment obligation through Lynx,

    • (iii) the settlement mechanism designated under subsection 27(2) is not open,

    • (iv) transfer of the amount specified in the settlement instructions would exceed the “net send limit”, as defined in the Rules, set by the sending participant, or

    • (v) the Rules require that the settlement instructions must be validated by the sending participant before the Lynx payment obligation can be settled through Lynx; or

  • (b) be rejected if the payment message is a duplicate or the settlement instructions contain an error specified in the Rules.

Marginal note:Settlement required

• 31 (1) Subject to subsection (2), the Association must settle each Lynx payment obligation for which settlement instructions are sent to a settlement mechanism under subsection 30(1) or from the conditional release mechanism.

• Marginal note:Exception — negative balance

  (2) Unless the sending participant is the Bank, the Association must not settle a Lynx payment obligation if settling it would result in a negative balance in the Lynx account for the settlement mechanism designated under subsection 27(2).

Marginal note:Settlement through Lynx

• 32 (1) For the purpose of this By-law, a Lynx payment obligation is settled though Lynx when

  • (a) the Association transfers the amount indicated in the settlement instructions from the sending participant’s Lynx account for the settlement mechanism designated under subsection 27(2) to the receiving participant’s Lynx account for that settlement mechanism; and

  • (b) the Association makes the corresponding entries to those accounts in accordance with the procedures set out in the Rules.

• Marginal note:Payment confirmation reference number

  (2) After a Lynx payment obligation is settled through Lynx, the Association must provide the financial message service provider with the payment confirmation reference number that is to accompany the payment message that the service provider will provide to the participants.