Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

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

Regulations are current to 2024-02-06 and last amended on 2022-06-01. Previous Versions

PART 3Lynx Operations (continued)

Liquidity (continued)

Credit Limit

Marginal note:Credit limit established

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

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

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

  • Marginal note:New credit limit

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

Funding Settlement Mechanisms

Marginal note:Minimum amount of funds

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

Marginal note:Apportion funds

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

  • Marginal note:Minimum

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

Intraday Loan

Marginal note:Bank makes intraday loan

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

  • Marginal note:Instructions to repay intraday loan

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

  • Marginal note:Outstanding amount of intraday loan

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

  • Marginal note:Transfers and entries

    (4) The Association must

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

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

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

Marginal note:Participant’s instructions

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

  • Marginal note:Transfers and entries

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

    • (a) make the transfer as instructed; and

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

Marginal note:Direction by Bank to repay

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

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

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

  • Marginal note:Condition

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

  • Marginal note:Instruction to repay or transfer

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

Liquidity for Lynx Payment Obligations

Marginal note:Liquidity available

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

A = B + (C – D)

where

A
is the total amount of liquidity available to a participant to settle Lynx payment obligations;
B
is the participant’s credit limit;
C
is the total amount of the payments received by the participant from the settlement of Lynx payment obligations in all settlement mechanisms; and
D
is the total amount of the payments sent by the participant in settlement of Lynx payment obligations that have been settled through Lynx in all settlement mechanisms.

Payment Messages

Marginal note:Payment items

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

Marginal note:Sending payment messages

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

  • Marginal note:Designation of settlement mechanism

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

Settlement

Marginal note:Financial message service provider

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

Marginal note:Extraction of settlement instructions by participant

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

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

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

Marginal note:Settlement instructions sent to settlement mechanism

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

  • Marginal note:Exceptions

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

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

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

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

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

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

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

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

Marginal note:Settlement required

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

  • Marginal note:Exception — negative balance

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

Marginal note:Settlement through Lynx

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

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

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

  • Marginal note:Payment confirmation reference number

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

Marginal note:Finality for participants

 A sending participant’s payment to a receiving participant is final and irrevocable when the Lynx payment obligation is settled through Lynx in accordance with subsection 32(1).

Marginal note:Settlement queues

  •  (1) If a Lynx payment obligation cannot be settled through Lynx immediately after the settlement instructions are sent to a settlement mechanism, those instructions must

    • (a) be held in the settlement queue for that settlement mechanism, in the sequence set out in the Rules, for processing later in the payments processing cycle; or

    • (b) be rejected, if that settlement mechanism does not have a settlement queue.

  • Marginal note:Removal from queue

    (2) A sending participant may, at any time, remove from a settlement queue any settlement instructions that were contained in a payment message that it sent.

Marginal note:Rejection of settlement instructions

 Settlement instructions must be rejected if

  • (a) they remain in the settlement queue when the settlement mechanism closes; or

  • (b) they remain in the conditional release mechanism when the finalization window begins.

Payments to Payees

Marginal note:Payment

  •  (1) After a Lynx payment obligation is settled through Lynx and the receiving participant has the payment message and the payment confirmation reference number, the receiving participant must make the amount of the payment finally and irrevocably available to the payee

    • (a) in the case where the payee makes a reasonable request for payment before the end of the payments processing cycle, as soon as feasible after the request is received, but by no later than the end of the payments processing cycle; and

    • (b) in any other case, by no later than the end of the payments processing cycle.

  • Marginal note:Service charges

    (2) A receiving participant may deduct the amount of a service charge from the amount of a payment and must comply with the deduction and disclosure procedures, if any, set out in the Rules.

  • Marginal note:Final and irrevocable

    (3) The amount of a payment is made finally and irrevocably available to a payee when the earliest of the following actions is taken:

    • (a) the receiving participant credits the amount to an account of the payee;

    • (b) the receiving participant lawfully applies the amount against a debt of the payee; and

    • (c) the receiving participant otherwise makes the amount of the payment accessible to the payee.

Marginal note:Representation to payee

  •  (1) A receiving participant must not represent to a payee that a payment it has made to the payee is a payment under section 36 unless there is an associated Lynx payment obligation that has been settled through Lynx.

  • Marginal note:Finality for payee

    (2) If a receiving participant makes a payment available to a payee and there is no associated Lynx payment obligation or that obligation has not yet been settled through Lynx, the amount of the payment is made finally and irrevocably available to the payee if

    • (a) the payee requests that the receiving participant provide the payment confirmation reference number; and

    • (b) the receiving participant provides the payee with a number that it represents as being the payment confirmation reference number.

Marginal note:Exceptional circumstances

 If any of the following exceptional circumstances exist, the receiving participant must comply with the procedures set out in the Rules for those circumstances instead of making the amount of the payment finally and irrevocably available to the payee in accordance with section 36:

  • (a) the payment message received by the receiving participant contains an error or omission specified in the Rules;

  • (b) the payment message is received by the receiving participant after the time specified in the Rules;

  • (c) the amount of the payment to be made available must be converted into a currency other than Canadian dollars;

  • (d) action is required by the branch or office at which the amount of the payment is to be made available to the payee and the receiving participant receives the payment message and payment confirmation reference number after the time specified in the Rules;

  • (e) the receiving participant cannot make the amount of the payment available due to circumstances beyond its control;

  • (f) the receiving participant cannot make the amount of the payment available because of a restriction it has imposed on the payee or the account to which the payment is to be credited;

  • (g) in order to comply with a law or an order of a court, the receiving participant cannot make the amount of the payment available to the payee; or

  • (h) the receiving participant agrees to the payee’s request that the amount of the payment not be made available to them.

Marginal note:Payment confirmation reference number

 A receiving participant must provide a payee with the payment confirmation reference number if the receiving participant has the number and it is requested by the payee.

 

Date modified: