Vol. 150, No. 36 — September 3, 2016

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

Statutory authority
Canadian Payments Act

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-law.)

Issues

An amendment to the Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System (By-law No. 3) is being made to address concerns raised by the Standing Joint Committee for the Scrutiny of Regulations.

Background

The Canadian Payments Association (CPA) is a statutory body created by the Canadian Payments Act with a mandate to establish and operate national systems for the exchange, clearing, and settlement of payments between banks, credit unions, and other CPA members (115 members currently). Two systems operated by the CPA are the Automated Clearing Settlement System (ACSS) and the Large Value Transfer System (LVTS).

In addition to operating these systems, the CPA develops, implements and updates the rules and standards that govern the clearing and settlement of payments exchanged in Canada. The Association operates on a not-for-profit basis, with annual operating and capital expenditure budgets prepared by the Board of Directors and funded by dues paid by its members.

An amendment to By-law No. 3 is being made to address concerns raised by the Standing Joint Committee for the Scrutiny of Regulations.

Objectives

The objective of the amendment is to address concerns raised by the Standing Joint Committee for the Scrutiny of Regulations. The amendment clarifies the meaning of “regulator” in section 59 by replacing the term with a more functional description.

Description

Currently, section 59 of By-law No. 3 stipulates that a direct clearer or group clearer that is in default cannot make entries into the ACSS unless it is under the control of a regulator. The Standing Joint Committee for the Scrutiny of Regulations has requested that the meaning of regulator be clarified. In the context of By-law No. 3, a regulator is meant to include federal and provincial entities that have resolution powers over direct or group clearers. Therefore, and taking into consideration that entities with such resolution powers may change over time, it is proposed to amend this provision to clarify that, to make entries into the ACSS, a direct or group clearer in default (or its assets) must be under the control or ownership of a federal or provincial regulator or supervisory body, or an agent of Her Majesty in right of Canada or agent or mandatary of Her Majesty in right of a province. The reference to an agent of Her Majesty is necessary to include the Canada Deposit Insurance Corporation which currently is neither a regulator nor a supervisory body but rather an agent of Her Majesty in right of Canada with resolution powers.

In addition, because section 59 is currently placed under a heading that does not apply to it (Default of Indirect Clearer), it is proposed to repeal it and add the amended provision under the correct heading (Default of Direct Clearer or Group Clearer) as section 57.1.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as the By-law No. 3 changes do not impose new administrative burden costs on business.

Small business lens

The small business lens does not apply to the by-law amending By-law No. 3, as there are no costs to small business.

Consultation

Officials from the Canada Deposit Insurance Corporation, the Bank of Canada, the Canadian Payments Association and the Department of Finance Canada were consulted.

Rationale

The amendment to By-law No. 3 is being made to address concerns raised by of the Standing Joint Committee for the Scrutiny of Regulations. The amendment clarifies the meaning of “regulator” in section 59 by replacing the term with a more functional description.

Implementation, enforcement and service standards

In accordance with subsection 18(2) of the Canadian Payments Act, by-law changes require approval by the Minister of Finance to come into force. Following ministerial approval, the by-law must be sent to all CPA members by the President of the CPA. The CPA is responsible for ensuring that its members comply with the by-laws, as applicable. The amendment does not require any new mechanisms to ensure compliance and enforcement.

Contact

Deborah Wilson
Senior Legal Counsel and Principal, Legal and Regulatory Affairs
Canadian Payments Association
Constitution Square, Tower II
350 Albert Street, Suite 800
Ottawa, Ontario
K1R 1A4
Email: dwilson@payments.ca

PROPOSED REGULATORY TEXT

Notice is given that the Board of Directors of the Canadian Payments Association, pursuant to subsection 18(1) (see footnote a) of the Canadian Payments Act (see footnote b), proposes to make the annexed By-law Amending the Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Hugues Vaillancourt, Chief, Payments Policy, Financial Sector Policy Branch, Department of Finance, 90 Elgin Street, Ottawa, Ontario K1A 0G5 (tel.: 613-369-4123; fax: 613-369-3894; email: hugues.vaillancourt@canada.ca).

Ottawa, August 2, 2016

Eileen Mercier
Chairperson of the Board of Directors of the
Canadian Payments Association

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

Amendments

1 The Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System (see footnote 1) is amended by adding the following after section 57:

Prohibition — entries into ACSS

57.1 A direct clearer or group clearer that is in default shall not make entries into the ACSS unless the direct clearer or group clearer or its assets are under the control or ownership of a federal or provincial regulator or supervisory body or any agent of Her Majesty in right of Canada or agent or mandatary of Her Majesty in right of a province.

2 Section 59 of the By-law is repealed.

Coming into Force

Registration

3 This By-law comes into force on the day on which it is registered.

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