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

Short Title

Marginal note:Short title

1 This Act may be cited as the Payment Clearing and Settlement Act.

Interpretation

Marginal note:Definitions

2 The following definitions apply in this Act.

Bank

Bank means the Bank of Canada. (banque)

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)

Canadian participant

Canadian participant means a participant that is incorporated or formed under an enactment of Canada or a province. (participant canadien)

central counter-party

central counter-party means a corporation, association, partnership, agency or other entity in a clearing and settlement system with whom all participant’s payment rights and obligations are netted to produce a single amount owing as between each participant and the central counter-party. (intermédiaire)

clearing and settlement system

clearing and settlement system means a system or arrangement 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 that meets the following conditions:

• (a) there are at least three participants, at least one of which is a Canadian participant and at least one of which has its head office in a jurisdiction other than the jurisdiction where the head office of the clearing house is located;

• (b) the clearing or settlement is wholly or partly in Canadian dollars; and

• (c) except in the case in which the payment obligations arise from derivatives contracts, the settlement is ultimately effected through adjustments to the account or accounts of one or more of the participants at the Bank.

For greater certainty, it includes a system or arrangement for the clearing or settlement of securities transactions, derivatives contracts, foreign exchange transactions or other transactions if the system or arrangement also clears or settles payment obligations arising from those transactions or exchanges payment messages for the purpose of clearing or settlement of such obligations. (système de compensation et de règlement)

clearing house

clearing house means a corporation, association, partnership, agency or other entity that provides clearing, settlement or payment message exchange services for a clearing and settlement system. It includes a securities and derivatives clearing house, as defined in subsection 13.1(3), but does not include a stock exchange or the Bank. (chambre de compensation)

eligible financial contract

eligible financial contract has the same meaning as in subsection 22.1(2) of the Winding-up and Restructuring Act. (contrat financier admissible)

Minister

Minister means the Minister of Finance. (ministre)

oversight information

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

participant

participant means a party to an arrangement that establishes a clearing and settlement system. (établissement participant)

payments system risk

payments system risk means the risk that a disruption to or a failure of a clearing and settlement system could cause a significant adverse effect on economic activity in Canada by

• (a) impairing the ability of individuals, businesses or government entities to make payments, or

• (b) producing a general loss of confidence in the overall Canadian payments system, which includes payment instruments, infrastructure, organizations, market arrangements and legal frameworks that allow for the transfer of monetary value. (risque pour le système de paiement)

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)

systemic risk

systemic risk means the risk that the inability of a participant to meet its obligations in a clearing and settlement system as they become due, or a disruption to or a failure of a clearing and settlement system, could, by transmitting financial problems through the system, cause

• (a) other participants in the clearing and settlement system to be unable to meet their obligations as they become due,

• (b) financial institutions in other parts of the Canadian financial system to be unable to meet their obligations as they become due,

• (c) the clearing and settlement system’s clearing house or the clearing house of another clearing and settlement system within the Canadian financial system to be unable to meet its obligations as they become due, or

• (d) an adverse effect on the stability or integrity of the Canadian financial system. (risque systémique)

PART IClearing and Settlement System Regulation

Designated Clearing and Settlement Systems

Marginal note:Application

3 This Part applies in respect of clearing and settlement systems designated under subsection 4(1).

Marginal note:Designation by Governor

• 4 (1) If the Governor of the Bank is of the opinion that a clearing and settlement system could be operated in a manner that poses a systemic risk or payments system risk and the Minister is of the opinion that it is in the public interest to do so, the Governor may designate the clearing and settlement system as a clearing and settlement system that is subject to this Part.

• Marginal note:Revocation

  (2) If the Governor of the Bank is of the opinion that the designated clearing and settlement system could no longer be operated in a manner that poses a systemic risk or payments system risk and the Minister is of the opinion that it is in the public interest to do so, the Governor may revoke the designation.

• Marginal note:Notice

  (3) If a designation is made or revoked, the Governor of the Bank shall, in writing, so inform in advance the clearing and settlement system’s clearing house and shall cause a copy of the designation or revocation, as the case may be, to be published in the Canada Gazette.

Information

Marginal note:Information to be provided to Bank

5 A clearing house shall, in respect of the designated clearing and settlement system, provide the Bank with any information that the Bank may request in writing, at any time and in any form and manner that is specified by the Bank.

Directives

Marginal note:Directive to clearing house

• 6 (1) The Governor of the Bank may issue a directive in writing to a clearing house of a designated clearing and settlement system that requires the clearing house, within any period that may be specified in the directive, to take  — and to have the participants take — any corrective measures that the Governor considers necessary, if the Governor is of the opinion that systemic risk or payments system risk could be inadequately controlled because of

  • (a) the design or operation of the clearing and settlement system;

  • (b) the ownership or control of the clearing and settlement system;

  • (c) aspects of organizational structure or corporate governance of the clearing house that are related to risk management;

  • (d) the management or operation of the clearing house; or

  • (e) actual or anticipated acts or omissions of the clearing house or of a participant.

• Marginal note:Directive to participants

  (2) The Governor of the Bank may issue a directive in writing to a participant that requires the participant, within any period that may be specified in the directive, to take any corrective measures that the Governor considers necessary if the Governor has formed an opinion referred to in subsection (1) that systemic risk or payments system risk could be inadequately controlled and

  • (a) the clearing house fails to comply with a directive that has been issued to it under subsection (1);

  • (b) the designated clearing and settlement system does not have a clearing house located in Canada; or

  • (c) in the opinion of the Governor,

    • (i) the risk could be inadequately controlled because of an actual or anticipated act or omission by a participant, and

    • (ii) the actual or anticipated act or omission is not subject to the by-laws, agreements, rules, procedures, guides or other documentation governing the designated clearing and settlement system.

• Marginal note:Factors to be taken into account

  (2.1) In determining the corrective measures that are necessary, the Governor of the Bank shall take into account the nature, severity and imminence of the risk and any other risk-related factors that the Governor considers appropriate.

• Marginal note:Clarification

  (3) For greater certainty, a directive issued under this section must not be made in respect of

  • (a) the capital adequacy of a participant;

  • (b) the management of a participant’s investments;

  • (c) a participant’s corporate governance;

  • (d) a participant’s relations with customers who are not themselves participants in the designated clearing and settlement system;

  • (e) a participant’s ownership structure; or

  • (f) any other matter that is not directly related to a participant’s participation in the designated clearing and settlement system.

• Marginal note:Directive may apply to statutory system

  (4) Subject to the approval of the Minister, a directive, if it so provides, applies to a designated clearing and settlement system that is established under a statute.

Marginal note:Representations

• 6.1 (1) Before issuing a directive to a clearing house or a participant, the Governor of the Bank shall provide the clearing house or participant, as the case may be, with an opportunity to make representations.

• Marginal note:Exception

  (2) If, in the opinion of the Governor of the Bank, providing the clearing house or participant with an opportunity to make representations would undermine the effectiveness of the directive, the Governor of the Bank may, without providing that opportunity, issue a directive under section 6 to the clearing house or participant that has effect for a period of not more than 15 days and may extend the directive once, in writing, for a further period of not more than 15 days.

Bank Powers

Marginal note:General powers

7 The Bank may do all or any of the following things in relation to a designated clearing and settlement system and its clearing house:

• (a) provide a secured or unsecured guarantee of settlement by participants;

• (b) make liquidity loans to the clearing house and the central counter-party; and

• (c) act as the central counter-party to the participants.

Settlement Provisions

Marginal note: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,

  • (a) the settlement rules of a designated clearing and settlement system are valid and are binding on the clearing house, the participants, a central counter-party and the Bank and any action may be taken or payment made in accordance with the settlement rules;

  • (b) the obligation of a participant, a clearing house or a central counter-party to make payment to a participant and the right of a participant, a clearing house or a central counter-party to receive payment from a participant, a clearing house or a central counter-party shall be netted and a net settlement or close-out amount shall be determined in accordance with the settlement rules, if they so provide; and

  • (c) if a payment is made, property is delivered or an interest in, or in Quebec a right to, property is transferred in accordance with the settlement rules of a designated clearing and settlement system, the payment, delivery or transfer shall not be required to be reversed, repaid or set aside.

• Marginal note:Payments not subject to set aside provisions

  (2) An entry to or a payment out of the account of a participant, a clearing house or a central counter-party at the Bank to settle a payment obligation in a designated clearing and settlement system shall not be the subject of any provision or order that operates as a stay of that activity.

• Marginal note:Rights, etc., not subject to stay

  (3) The rights and remedies of a participant, a clearing house, a central counter-party or the Bank in respect of collateral granted to it as security for a payment or the performance of an obligation incurred in a designated clearing and settlement system may not be the subject of any stay provision or order affecting the ability of creditors to exercise rights and remedies with respect to the collateral.

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

  (3.1) Despite subsections (1) to (3) and the settlement rules,

  • (a) 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; and

  • (b) a clearing house, as defined in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act, shall comply with subsection 39.15(3.3) of that Act, shall take any action required by subsection 39.15(7.12) of that Act and shall not take any action prevented by that subsection 39.15(7.12).

• Marginal note:Application of Canadian law

  (4) Notwithstanding that all or part of the administration or operation of a designated clearing and settlement system is conducted outside Canada or that its settlement rules are governed by the laws of a foreign jurisdiction, where in any judicial proceedings in Canada a court determines that the rights and obligations of any person arising out of or in connection with the operation of the designated clearing and settlement system are governed in whole or in part by Canadian law, the provisions of this section shall be applied to the extent that the Canadian law applies in determining those rights and obligations.

• Marginal note:Interpretation

  (5) In this section, settlement rules means the rules, however established, that provide the basis on which payment obligations, delivery obligations or other transfers of property or interests in, or in Quebec rights to, property are made, calculated, netted or settled and includes rules for the taking of action in the event that a participant is unable or likely to become unable to meet its obligations to the clearing house, a central counter-party, other participants or the Bank.

Notice and Approvals

Marginal note:Significant change

• 9 (1) For the purposes of this section, a change is significant if it could reasonably be expected to have a material impact on the efficiency, safety or soundness of the designated clearing and settlement system.

• Marginal note:Notice required

  (2) A clearing house shall provide the Bank with reasonable notice before making

  • (a) any significant change in relation to the designated clearing and settlement system;

  • (b) any change in relation to the design or operation of the system or to the by-laws, agreements, rules, procedures, guides or other documentation governing the system; or

  • (c) any change to the constating documents and by-laws of the clearing house.

• Marginal note:Approval required

  (3) If the Governor of the Bank is of the opinion that a significant change that the clearing house intends to make in relation to the designated clearing and settlement system would have an effect on the control of risk for the system, the clearing house, the participants or the financial system in Canada, that change shall not take effect unless it is approved in writing by the Governor, subject to any conditions that the Governor considers appropriate.

• Marginal note:Notice required of other changes

  (4) A clearing house shall, without delay after it makes any change in relation to the designated clearing and settlement system, other than a change referred to in subsection (2), provide the Bank with written notice of the change, including any change affecting

  • (a) the composition of a board of directors of the clearing house due to resignation or otherwise; or

  • (b) the appointed auditor of the clearing house.

Audits and Inspections

Marginal note:Powers of Bank

• 10 (1) The Bank may, for the purposes of carrying out its functions under this Act, conduct audits and inspections of a clearing house, and every clearing house shall, as required, assist the Bank to the extent necessary to enable the Bank to carry out an audit or inspection.

• Marginal note:Powers of Bank

  (2) For the purpose of obtaining evidence under oath in relation to an audit or inspection under subsection (1), the Bank has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act.

PART I.1Clearing and Settlement System Resolution

Scope

Marginal note: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

Marginal note:Resolution Authority

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

Marginal note: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.

Marginal note: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

Marginal note: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.

• Marginal note:Chairperson

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

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

• Marginal note:Conflicts of interest

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

Resolution Plans

Marginal note: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.

• Marginal note: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

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note:Publication

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

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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).

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

• Marginal note:Definition of financial collateral

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

Vesting and Receivership

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note:Liability of other successor employers

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

• Marginal note: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.

• Marginal note: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.

• Marginal note:Publication

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

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

• Marginal note: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.

• Marginal note: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.

• Marginal note:Publication

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

Bridge Clearing Houses

Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note:Reasonable consideration

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

Non-application of Certain Legislative Provisions

Marginal note: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.

• Marginal note: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.

Marginal note: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.

Marginal note: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.

• Marginal note: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

Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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

Marginal note: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.

• Marginal note: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.

• Marginal note: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).

• Marginal note: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).

• Marginal note:Prior approval of Minister

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

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

Marginal note:Dissolution

• 11.23 (1) The Bank may, if it is a shareholder of a clearing house, take any measure in respect of the dissolution of the clearing house.

• Marginal note:Winding-up and Restructuring Act

  (2) The Bank may, if it is a shareholder of a clearing house that is incorporated under the Trust and Loan Companies Act, apply for a winding-up order in respect of the clearing house under the Winding-up and Restructuring Act.

• Marginal note:Bank considered to be creditor

  (3) For the purposes of the Winding-up and Restructuring Act, the Bank is considered to be a creditor of the clearing house that is incorporated under the Trust and Loan Companies Act.

Marginal note: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

Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

Marginal note:Appointment of assessor

• 11.28 (1) 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 determination made by the Bank under subsection 11.26(1).

• Marginal note:Review

  (2) In reviewing the Bank’s determination, the assessor shall decide whether the Bank made its determination based on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it or on an unreasonable estimate.

• Marginal note:Confirmation of determination

  (3) If the assessor decides that the Bank did not make its determination based on such a finding of fact or on such an estimate, the assessor shall confirm the Bank’s determination.

• Marginal note:Determination of amount

  (4) If the assessor decides that the Bank made its determination based on such a finding of fact or on such an estimate, the assessor shall determine, in accordance with the regulations, the amount of compensation, if any, to be paid to the prescribed person or entity and substitute the assessor’s determination for the Bank’s determination.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

• Marginal note: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.

• Marginal note: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.

Marginal note:Determination and decision final

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

PART IIGeneral

Bank Powers

Marginal note:Other powers

12 The Bank may do all or any of the following:

• (a) be a participant in a clearing and settlement system and participate in its loss-sharing mechanism;

• (b) act as a custodian of financial assets or act as a settlement agent, or both, for a clearing house;

• (c) despite section 23 of the Bank of Canada Act, accept and pay interest on deposits from a clearing house, participant or central counter-party.

Marginal note: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.

Marginal note:Bank may impose fees

• 12.1 (1) The Bank may annually impose a fee on a clearing house for the reasonable costs to the Bank of the administration of this Act for that year in respect of the clearing house’s designated clearing and settlement system.

• Marginal note:Recovery of fees

  (2) A fee imposed under subsection (1) constitutes a debt due to the Bank and may be recovered as such in any court of competent jurisdiction.

Netting Agreements

Marginal note:Termination

• 13 (1) Despite anything in any law relating to bankruptcy or insolvency or any order of a court made in respect of a reorganization, arrangement or receivership involving insolvency, a party to a netting agreement may terminate the agreement and determine a net termination value or net settlement amount in accordance with the provisions of the agreement and the party entitled to the net termination value or net settlement amount is to be a creditor of the party owing the net termination value or net settlement amount for that value or amount.

• Marginal note:Eligible financial contract

  (1.1) If a netting agreement referred to in subsection (1) is an eligible financial contract, a party to the agreement may also, in accordance with the provisions of that agreement, deal with financial collateral including

  • (a) selling or foreclosing or, in the Province of Quebec, surrendering financial collateral; and

  • (b) setting off or compensating financial collateral or applying the proceeds or value of financial collateral.

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

  (1.2) Despite subsections (1) and (1.1), 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:Interpretation

  (2) The following definitions apply in this section.

  financial collateral

  financial collateral means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

  • (a) cash or cash equivalents, including negotiable instruments and demand deposits,

  • (b) securities, a securities account, a securities entitlement or a right to acquire securities,

  • (c) a futures agreement or a futures account,

  • (d) an assignment of a right to payment or delivery against a clearing house, or

  • (e) any other collateral that is prescribed. (garantie financière)

  financial institution

  financial institution means

  • (a) a financial institution within the meaning of section 2 of the Trust and Loan Companies Act,

  • (b) such other entity or entity within a class of entities engaged primarily in the business of providing financial services as may be designated by order of the Governor in Council to be a financial institution for the purposes of this section,

  • (c) a trustee, manager or administrator of a pension fund maintained to provide benefits under a pension plan registered under the Income Tax Act,

  • (d) the Canada Pension Plan Investment Board, or

  • (e) the Public Sector Pension Investment Board. (institution financière)

  net termination value

  net termination value means the net amount obtained after setting off or compensating or otherwise netting the obligations between the parties to a netting agreement in accordance with its provisions. (reliquat net)

  netting agreement

  netting agreement means an agreement between two or more financial institutions, between the Bank and one or more financial institutions or between a participant and a customer to which the participant provides clearing services that is

  • (a) an eligible financial contract; or

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

  title transfer credit support agreement

  title transfer credit support agreement means an agreement under which title to property has been provided for the purpose of securing the payment or performance of an obligation in respect of an eligible financial contract. (accord de transfert de titres pour obtention de crédit)

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).

Statutory Instruments Act

Marginal note: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.

Liability

Marginal note:No liability if in good faith

20 No action lies against Her Majesty, the Minister, the Bank, any officer, employee or director of the Bank or any person acting under the direction of the Governor of the Bank for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that under this Act are intended or authorized to be executed or performed.

Judicial Review

Marginal note:No stay on judicial review

21 On an application for judicial review under the Federal Courts Act of any designation under subsection 4(1) or of any directive issued under this Act, no stay of the designation or directive shall be granted pending the final disposition of the application.

Participants

Marginal note:Participants responsible where no clearing house

• 22 (1) Where a clearing and settlement system does not have a clearing house located in Canada, the Canadian participants

  • (a) shall comply with the obligations imposed under this Act on a clearing house in respect of a clearing and settlement system, and

  • (b) have all the rights conferred by this Act on a clearing house in respect of a clearing and settlement system

  in the same manner and to the same extent as if the Canadian participants were the clearing house on which those obligations and rights are imposed or conferred and, for that purpose, any action that the Bank may take in respect of a clearing house may only be taken in respect of the Canadian participants.

• Marginal note:Participants responsible where clearing house fails to comply, etc.

  (2) Where a clearing house fails to comply with the obligations imposed on it under this Act in respect of its clearing and settlement system or otherwise contravenes this Act, the participants jointly and severally shall comply with those obligations or are liable for the contravention in the same manner and to the same extent as if the participants were the clearing house on which the obligations are imposed or that committed the contravention.

• (3) [Repealed, 2012, c. 5, s. 216]

Marginal note:Foreign participation

• 22.1 (1) An authorized foreign bank or foreign institution that is or wishes to be a participant in a designated clearing and settlement system shall provide the Governor of the Bank with any information regarding the application of foreign laws to the authorized foreign bank or foreign institution that the Governor considers necessary.

• Marginal note:Prohibition or conditions

  (2) The Governor of the Bank may prohibit the authorized foreign bank or foreign institution from being a participant in the designated clearing and settlement system or may require it to comply with any conditions with respect to its participation that the Governor considers necessary if the Governor is of the opinion, on the basis of the information provided under subsection (1) or of any other information that the Governor considers relevant, that its participation could pose a systemic risk or a payments system risk or could pose an unacceptable risk to the Bank in guaranteeing settlement of the authorized foreign bank’s or foreign institution’s obligations.

• Marginal note:Powers of Governor of Bank

  (3) The Governor’s powers under subsection (2) are in addition to all other powers conferred on the Governor and the Bank by this Act.

• Marginal note:Definitions

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

  authorized foreign bank

  authorized foreign bank means an authorized foreign bank within the meaning of section 2 of the Bank Act. (banque étrangère autorisée)

  designated clearing and settlement system

  designated clearing and settlement system[Repealed, 2014, c. 39, s. 373]

  foreign institution

  foreign institution means a foreign institution within the meaning of section 2 of the Bank Act. (institution étrangère)

Marginal note:Information

23 A participant is not required to provide information to the Bank under this Act concerning another participant of a clearing and settlement system if that information is not available to all the participants.

Regulations

Marginal note: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).