CANADA: Bank of Canada Designates Automated Clearing Settlement System under the Payment Clearing and Settlement Act

Friday May 6 2016

The Governor of the Bank of Canada has designated, effective 2 May 2016, the Automated Clearing Settlement System (ACSS) for oversight under the Payment Clearing and Settlement Act (PCSA) as a clearing and settlement system that has the potential to pose payments system risk. The ACSS is owned and operated by the Canadian Payments Association (CPA), an organization established by the Canadian Payments Act to operate national payment systems.

The ACSS is being designated following the expansion of the Bank’s oversight responsibilities in December 2014 to include systems that have the potential to pose payments system risk (referred to as Prominent Payment Systems). A disruption or failure of a Prominent Payment System could cause a significant adverse effect on economic activity in Canada, potentially leading to a general loss of confidence in the overall Canadian payments system.

Designation brings the system under the formal oversight of the Bank of Canada, which requires compliance with Risk Management Standards for Prominent Payment Systems. These are based on the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI); amended to reflect the different risks posed by Prominent Payment Systems compared to systems designated as systemically important. Designation also provides the system with legal protections that are important to the finality of payments.

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