Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System (SOR/2003-346)

Marginal note:Exception — ceasing to act immediately

• 39 (1) Subject to subsection 39.15(3.1) of the Canada Deposit Insurance Corporation Act, a clearing agent may, despite subsections 38(1) and (3), immediately cease to act for an indirect clearer if

  • (a) the clearing agent reasonably believes that the indirect clearer poses a legal, financial or operational risk to the clearing agent; or

  • (b) the indirect clearer has breached a substantial term of an agreement entered into with the clearing agent for the purposes of clearing and settlement.

• Marginal note:Notification to other clearing agents

  (2) The clearing agent shall give notice, before the time set out in the rules and at least one hour prior to ceasing to act, to the other clearing agents acting for the indirect clearer. The other clearing agents may unanimously waive the notice or abridge the time for the notice.

• Marginal note:Notification to indirect clearers and group clearers

  (3) The clearing agent shall, immediately on ceasing to act,

  • (a) give written notice to the indirect clearer of its decision to immediately cease to act for the indirect clearer; and

  • (b) give notice of its decision to the President, to its other indirect clearers and to the other clearing agents acting for the indirect clearer and, in so far as is practicable, give notice of its decision to the other direct clearers and group clearers.

• Marginal note:Notice by the President

  (4) The President shall give notice to every other direct clearer and group clearer of the clearing agent’s decision to immediately cease to act for the indirect clearer.

• Marginal note:Notice by direct clearers and group clearers

  (5) Every other direct clearer or group clearer shall immediately notify every indirect clearer for which it acts as clearing agent or every entity belonging to the group for which it acts as group clearer, as the case may be, of that decision.

Marginal note:Obligation to accept payment items

40 A clearing agent that ceases to act for an indirect clearer shall accept payment items, including those not giving rise to clearing through the ACSS, that are drawn on or payable by the indirect clearer and either effect clearing and settlement or make entries into the ACSS until the final exchange on the business day on which the clearing agent ceases to act.

Marginal note:Designation of new clearing agent

• 41 (1) An indirect clearer may, immediately on receiving the notice referred to in subsection 38(1) or 39(3), designate a new clearing agent from among the direct clearers and group clearers appointed by the Board to act as clearing agent.

• Marginal note:When designation takes effect

  (2) The designation takes effect at the time agreed on by the indirect clearer and the new clearing agent.

Marginal note:Duty to cooperate

42 The former and the new clearing agent shall cooperate to ensure an orderly change in representation.

Change to Composition of Group

Marginal note:Notice

43 A group clearer shall, at least 30 days prior to its effective date, give notice to the President of its decision to cease acting as a group clearer for an entity belonging to the group or of the withdrawal of an entity from the group for which it acts as a group clearer.

Marginal note:Exception — immediately ceasing to act

• 43.1 (1) Despite section 43, a group clearer may immediately cease to act for an entity belonging to the group if

  • (a) the group clearer reasonably believes that the entity poses a legal, financial or operational risk to the group clearer; or

  • (b) the entity has breached a substantial term of an agreement entered into with the group clearer for the purposes of clearing and settlement.

• Marginal note:Notice

  (2) The group clearer shall, immediately on ceasing to act,

  • (a) give written notice to the entity of its decision to immediately cease to act for that entity;

  • (b) give notice of its decision to the President;

  • (c) give notice of its decision to the other entities belonging to the group for which it is a group clearer or to every indirect clearer for which it acts as clearing agent, as the case may be; and

  • (d) in so far as is practicable, to give notice of its decision to the direct clearers and other group clearers.

• Marginal note:Notice by the President

  (3) The President shall give notice to the direct clearers and other group clearers of the group clearer’s decision to immediately cease to act for the entity.

• Marginal note:Notice by direct clearers and group clearers

  (4) The direct clearers and other group clearers shall immediately notify every indirect clearer for which they act as a clearing agent or every entity belonging to the group for which they act as a group clearer of that decision.

Marginal note:Obligation to accept payment items

44 The group clearer shall accept payment items, including those not giving rise to clearing through the ACSS, drawn on or payable by an entity for which it is ceasing to act or an entity that withdraws from the group for which it acts as group clearer and either effect clearing and settlement or make entries into the ACSS until the final exchange on the business day on which the group clearer ceases to act or on which the entity withdraws.

DIVISION 5Exchange, Clearing and Settlement

Exchange

Marginal note:Reception of payment items

• 45 (1) A direct clearer, group clearer and clearing agent shall receive payment items at every regional exchange point.

• Marginal note:Use of representative

  (2) A direct clearer, group clearer, clearing agent or the Bank of Canada may exchange payment items through a direct clearer or group clearer, acting on its behalf.

• Marginal note:Responsibility

  (3) The direct clearer, group clearer or clearing agent or the Bank of Canada shall remain responsible to ensure that the payment items are exchanged in accordance with the by-laws and the rules.

Marginal note:Suspension of exchanges

• 46 (1) If it becomes impractical to exchange any class of payment items at a particular regional exchange point on a given day, the President may, after consulting the direct clearers, group clearers and the Bank of Canada, suspend the exchange of the class of payment items or of all payment items for the regional exchange point for the current ACSS cycle.

• Marginal note:Measures

  (2) Immediately on suspension, the President shall, after consulting the direct clearers, group clearers and the Bank of Canada, take any measures that are necessary in the circumstances.

• Marginal note:Notification of measures taken

  (3) The President shall notify the direct clearers, group clearers and the Bank of Canada of the measures taken.

Clearing

Marginal note:Entries

• 47 (1) Direct clearers, group clearers, clearing agents and the Bank of Canada shall make entries into the ACSS, in accordance with the rules, for the purpose of clearing.

• Marginal note:Manual clearing

  (2) In case of a national failure of the ACSS within the meaning of the rules, direct clearers, group clearers, clearing agents and the Bank of Canada shall effect manual clearing in accordance with the rules.

Marginal note:Establishment of clearing balances

48 The Association shall ensure that clearing is effected by the ACSS and clearing balances are made available to the Bank of Canada.

Marginal note:Errors in clearing balances

49 Direct clearers, group clearers and the Bank of Canada shall correct errors in their clearing balances prior to the final adjustment time and in accordance with the rules.

Settlement

Marginal note:Settlement

• 50 (1) Subject to subsection (2), once the clearing balances have been established by the ACSS and corrected, if necessary, the Bank of Canada shall effect settlement by making the appropriate debit or credit entry into each direct clearer’s or group clearer’s settlement account.

• Marginal note:Default

  (2) In the case of a default by a direct clearer or group clearer under paragraph 53(1)(a), the Bank of Canada shall only effect settlement once the contributions by the other direct clearers, group clearers or the Bank of Canada have been made under subsection 57(2) or 57.01(2).

Marginal note:Notification of settlement

51 The Bank of Canada shall notify a direct clearer or group clearer on settlement.

Marginal note:Settlement is final

52 Settlement at the Bank of Canada is final and shall not be reversed under any circumstances.

DIVISION 6Default

Default of Direct Clearer or Group Clearer

Marginal note:Default of direct clearer or group clearer

• 53 (1) A direct clearer or group clearer is in default for the purposes of this By-law if

  • (a) its settlement account at the Bank of Canada has a shortfall that would preclude settlement and it does not obtain an advance from the Bank of Canada sufficient for that settlement; or

  • (b) it is not able to meet its collateral pool pledge requirement as established by section 34.1.

• Marginal note:Notice

  (2) The Bank of Canada shall immediately notify the President of a default and, in the case of a default under paragraph (1)(a), of the amount of the shortfall. The President shall then notify all other direct clearers and group clearers of the default.

54 [Repealed, SOR/2012-161, s. 11]

55 [Repealed, SOR/2012-161, s. 11]

56 [Repealed, SOR/2012-161, s. 11]

Marginal note:Allocation of shortfall

• 57 (1) Subject to subsection (3), upon receiving notice from the Bank of Canada of a default by a direct clearer or group clearer under paragraph 53(1)(a) and of the amount of the shortfall, the Association shall allocate the shortfall between the direct clearers and group clearers that are not in default by calculating, in accordance with the rules, the default contribution to be made by each of them.

• Marginal note:Default contribution

  (2) The direct clearers and group clearers that are not in default shall make a default contribution to the settlement account of the direct clearer or group clearer in default in the amount determined under subsection (1) within the time and in the manner specified by the rules.

• Marginal note:Limit of contribution

  (3) The total amount of default contributions under subsection (2) from the direct clearers and group clearers that are not in default shall not exceed the amount of the ACSS collateral pool calculated in subsection 34.1(1), less the amount pledged as collateral by the defaulting direct clearer or group clearer.

Marginal note:Calculation of additional contribution

• 57.01 (1) In the event that the default contributions made under section 57 are not sufficient to enable the Bank of Canada to effect settlement, the Association shall calculate, in accordance with the rules, an additional contribution to be made by direct clearers and group clearers that are not in default and by the Bank of Canada to effect settlement.

• Marginal note:Additional contribution

  (2) The direct clearers and group clearers that are not in default and the Bank of Canada shall make the additional contribution, in the amount determined under subsection (1), to the account of the direct clearer or group clearer in default within the time and in the manner specified in the rules.