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

Marginal note:ACSS operated by Association

22 The operation, management and ongoing maintenance of the ACSS form part of the business of the Association.

Marginal note:Operation of ACSS

23 Subject to section 46 and except in case of a national failure of the ACSS within the meaning of the rules, the Association shall ensure that the ACSS is operational on all business days.

Marginal note:Access to information

24 Access to information relating to clearing and to the operation of the ACSS shall be governed by the rules.

DIVISION 3Participation in the ACSS

Participants

Marginal note:Participants

25 Only direct clearers, group clearers, clearing agents and the Bank of Canada may make entries into the ACSS.

Requirements

Marginal note:Direct Clearers Appointment

26 Subject to section 32, the Board may, on completion by a member of the application procedures set out in the rules, appoint the member to act as a direct clearer if the member

• (a) maintains a settlement account with the Bank of Canada;

• (b) has established a loan facility with the Bank of Canada and has entered into any agreements that may be required by the Bank of Canada governing the settlement of the member’s clearing balance, the administration of the loan facility, the provision by the Bank of Canada of advances for ACSS purposes and the pledging of collateral to secure advances that may be made under the loan facility; and

• (c) [Repealed, SOR/2020-167, s. 4]

• (d) meets the technical, financial and other requirements set out in the rules.

Marginal note:Revocation of status

• 27 (1) The Board may revoke the direct clearer status of a member if that member no longer meets the requirements set out in section 26.

• Marginal note:Notification of revocation

  (2) The President shall, as soon as practicable, notify all members of the revocation.

Marginal note:Groups and Group Clearers Composition of group

• 28 (1) A group may consist of

  • (a) a central or cooperative credit association that has been appointed to be the group clearer and one or more of the following, including any combination of them:

    • (i) centrals,

    • (ii) cooperative credit associations,

    • (iii) federal credit unions,

    • (iv) locals that belong to the group clearer, or

    • (v) locals that belong to another central or cooperative credit association if that central or cooperative credit association is also a member of the group; or

  • (b) two or more members from one of the following categories that have appointed a member of the category to be the group clearer:

    • (i) authorized foreign banks and banks, excluding federal credit unions,

    • (ii) trust companies and loan companies,

    • (iii) securities dealers, or

    • (iv) other members, excluding centrals, cooperative credit associations, federal credit unions, qualified corporations, trustees of qualified trusts and life insurance companies.

• Marginal note:Central may act for locals

  (2) For greater certainty, if two or more locals belong to two centrals, one of which belongs to the other central, one of the centrals may appoint the other central to act as group clearer for itself and the locals.

Marginal note:Required approval

• 29 (1) An appointment referred to in section 28 is subject to the approval of the Board.

• Marginal note:Criteria for approval

  (2) The Board may approve the appointment if

  • (a) the appointed member complies with the requirements set out in paragraphs 26(a), (b) and (d); and

  • (b) [Repealed, SOR/2020-167, s. 5]

  • (c) in the case of a group referred to in paragraph 28(1)(b), the appointed member enters into contractual commitments with each of the entities belonging to the group that are necessary to ensure the ability of the member to satisfy its liability as group clearer.

Marginal note:Revocation of status

• 30 (1) The Board may revoke the group clearer status of a member if that member no longer complies with the requirements set out in paragraph 26(a), (b) or (d) or, in the case of a group referred to in paragraph 28(1)(b), the contractual commitments referred to in paragraph 29(2)(c) no longer ensure the ability of the member to satisfy its liability as group clearer.

• Marginal note:Notification of revocation

  (2) The President shall, as soon as practicable, notify all members of the revocation.

31 [Repealed, SOR/2012-161, s. 8]

Marginal note:Exception — Direct Clearer and Group Clearer Exception

32 A qualified corporation, on behalf of its money market mutual fund, a trustee of a qualified trust and a life insurance company are not eligible to be a direct clearer or group clearer.

Marginal note:Clearing agents appointment

• 33 (1) The Board may, on completion by a direct clearer or group clearer of the application procedures set out in the rules, appoint it to act as a clearing agent if the direct clearer or group clearer meets the technical, financial and other requirements set out in the rules.

• Marginal note:Designation of a central

  (2) A group clearer that has been appointed to act as a clearing agent for an indirect clearer may, in accordance with the rules, designate a central that belongs to the group where the settlement account of that indirect clearer is maintained and the loan facility of that indirect clearer is established.

• Marginal note:Effect of designation

  (3) The designation of a central in accordance with subsection (2) by the group clearer appointed to act as a clearing agent does not preclude the group clearer from remaining subject to all obligations applicable to clearing agents set out in this By-law and in the applicable rules.

Marginal note:Revocation of status

• 34 (1) The Board may revoke the clearing agent status of a direct clearer or group clearer that no longer meets the requirements set out in the rules.

• Marginal note:Automatic revocation

  (2) If a member’s status as direct clearer or group clearer is revoked, its status as clearing agent is also revoked.

• Marginal note:Notification of revocation

  (3) The President shall, as soon as practicable, notify all members of the revocation.

Pledging Collateral

Marginal note:Calculation of necessary collateral

• 34.1 (1) The Association shall calculate, in accordance with the rules, the required amount of the ACSS collateral pool and the amount of each direct clearer and group clearer’s collateral pool pledge. The Association shall periodically recalculate these amounts, in accordance with the rules.

• Marginal note:Pledging collateral

  (2) Each direct clearer and group clearer shall pledge collateral to the Bank of Canada, in an amount determined by the Association in accordance with the rules, within the time and in the manner set out in the rules. If the amount of the collateral pool pledge increases as a result of a recalculation under subsection (1), the direct clearer or group clearer shall pledge the recalculated amount, within the time and in the manner set out in the rules.

• Marginal note:Valuation by Bank of Canada

  (3) Any collateral pledged by a direct clearer or group clearer for ACSS purposes is subject to valuation by the Bank of Canada at the time the pledge is made.

• Marginal note:Insufficient collateral

  (4) If, on valuation of the collateral by the Bank of Canada, the value assigned by the Bank of Canada to the collateral pledged is less than the amount that is required to be pledged, the direct clearer or group clearer shall pledge additional collateral.

• Marginal note:Exceeding collateral requirement

  (5) If the value of the direct clearer or group clearer’s collateral pledge exceeds the amount that is required to be pledged, the direct clearer or group clearer shall, on request for a release made to the Bank of Canada, obtain a release of the excess collateral from the pledge.

Marginal note:Restricted purpose

34.2 A direct clearer or group clearer shall not use the collateral pledged under subsection 34.1(2) for any purpose other than securing an advance from the Bank of Canada to enable settlement under section 50.

DIVISION 4Representation

General

Marginal note:Representation of indirect clearers

35 An indirect clearer shall designate at least one clearing agent. However, for those payment items specified in the rules, an indirect clearer shall be represented at every regional exchange point by the same clearing agent.

Marginal note:Amalgamations

• 36 (1) If two members amalgamate, for a period of one year following the amalgamation,

  • (a) payment items, including those not giving rise to clearing through the ACSS, drawn on or payable by the member that ceases to exist, may continue to be exchanged; and

  • (b) in the case of an indirect clearer that ceases to exist, it may be represented at a regional exchange point, despite section 35, by more than one clearing agent for the payment items specified in the rules.

• Marginal note:Extension of period

  (2) The President may extend the one-year period if it is necessary for the proper conduct of the business of the amalgamating members.

Prior to Acting — Clearing Agent

Marginal note:Notice

• 37 (1) Subject to section 41, a clearing agent shall give at least 30 days’ notice to the President prior to acting as clearing agent for an indirect clearer.

• Marginal note:Obligation of President

  (2) The President shall inform the direct clearers and group clearers of the notice in accordance with the rules.

Ceasing to Act — Clearing Agent and Group Clearer

Marginal note:30 days notice

• 38 (1) A clearing agent shall give at least 30 days’ notice to an indirect clearer and to the President prior to ceasing to act as clearing agent for the indirect clearer.

• Marginal note:Obligation of President

  (2) The President shall inform the direct clearers and group clearers of the notice in accordance with the rules.

• Marginal note:Exception

  (3) Despite subsection (1), the clearing agent shall not cease acting for an indirect clearer if another clearing agent is designated to act for the indirect clearer until the other clearing agent has started acting for the indirect clearer.

• Marginal note:Status revoked

  (4) Despite subsections (1) and (3), a clearing agent shall cease to act without delay if its status is revoked.