Payments Canada by-law amendments

Summary#

This is a proposed set of changes to the by‑laws that govern Payments Canada under the Canadian Payments Act. The notice, published on March 7, 2020, would update the rules that run Canada’s main payment systems and asks for public comments within 30 days.

What it does#

• Aligns Payments Canada’s by‑laws with the updated Canada Deposit Insurance Corporation Act (CDIC Act) so payments rules match federal resolution tools (like creating a "bridge institution" or using bail‑in powers).
• Lets a bridge institution take on the failing institution’s payment rights and obligations so payment activity can continue.
• Exempts a bridge institution from having to pay full first‑year common service dues.
• Changes the Large Value Transfer System (LVTS) suspension rule so the President may suspend a participant only after consultation and with the concurrence of the Minister of Finance and the Governor of the Bank of Canada, rather than automatic suspension on a declaration of non‑viability.
• Updates the Automated Clearing Settlement System (ACSS) rules by removing the 0.5% system‑volume threshold for direct participation, moving to risk‑based access criteria.
• Clarifies that clearing agents cannot immediately stop acting for an indirect clearer when CDIC has provided a full financial guarantee.
• Moves several details about the Stakeholder Advisory Council (SAC) into the by‑laws (size, composition, terms). It also allows Payments Canada to pay consumer representatives on the SAC.
• Gives cost estimates: onboarding one or more new ACSS direct participants could cost existing participants about $786,500 (shared among 12 current direct participants), and remunerating consumer SAC members is estimated at $60,000 per year.

Who's affected#

• Payments Canada and its members who operate the payment systems.
• Financial institutions that are direct or group clearers in the ACSS and direct participants in the LVTS.
• Clearing agents that handle indirect clearers.
• Canada Deposit Insurance Corporation (CDIC), the Bank of Canada, and the Office of the Superintendent of Financial Institutions (OSFI), which were consulted and are directly involved in how resolution and suspension matters are handled.
• Consumer groups that might sit on the SAC (they could be eligible for pay).
• It is unclear whether many new firms will seek ACSS direct membership; Payments Canada expects only a few.

Why it matters#

• These changes are intended to reduce the chance that a failing bank’s payment activity is interrupted during a federal resolution. That matters because uninterrupted clearing and settlement keeps money moving in the economy.
• Removing the 0.5% volume rule opens the door for new direct participants in the retail clearing system under risk‑based criteria. That could make access fairer and potentially increase competition or innovation in payments.
• Making LVTS suspension discretionary aims to avoid blunt, automatic actions that might unnecessarily disrupt large‑value payments during a resolution, while still protecting the system’s safety.
• Paying consumer representatives may improve the presence and quality of consumer voice in Payments Canada’s advisory process.
• There are modest estimated costs to existing ACSS participants to onboard newcomers, and a small ongoing cost to remunerate consumer SAC members.