An Act to amend the Payment Clearing and Settlement Act

S.C. 2002, c. 14

Assented to 2002-06-04

An Act to amend the Payment Clearing and Settlement Act

SUMMARY

This enactment amends the Payment Clearing and Settlement Act to protect the netting agreements of a securities and derivatives clearing house and to permit a securities and derivatives clearing house to realize the collateral of a member in the event of the bankruptcy or insolvency of the member.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. The Payment Clearing and Settlement Act is amended by adding the following after section 13:

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 to secure the performance of obligations by a clearing member.

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”

« membre »

“clearing member” means a person who uses the services of a securities and derivatives clearing house.

“net termination value”

« reliquat net »

“net termination value” means the net amount obtained after setting off or otherwise netting the obligations between a securities and derivatives clearing house and a clearing member in accordance with the netting agreement.

“netting agreement”

« accord de compensation »

“netting agreement” means an agreement between a securities and derivatives clearing house and a clearing member that is

(a) an eligible financial contract within the meaning of section 22.1 of the Winding-up and Restructuring Act; or

(b) an agreement that provides for the netting or setting off of present or future obligations to make payments or deliveries against present or future rights to receive payments or take deliveries.

“securities and derivatives clearing house”

« chambre spécialisée »

“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 Canadian Depository For Securities Limited, a corporation resulting from an amalgamation 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.