Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System

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.