Level 1 flows of the Canadian market infrastructure: the key exchanges, clearing houses, the depository and the payment systems, one diagram per service, grouped by the institution that runs them (TMX Group with the TSX, TSX Venture and Alpha, the Montréal Exchange, CDCC and CDS; Cboe Canada and Nasdaq Canada; CanDeal with the Government of Canada auctions and the Canadian dollar swap; Payments Canada with Lynx, the ACSS and Interac; the Bank of Canada; CLS for the Canadian dollar). Each diagram follows an illustrative trade or payment through the service’s own cycle with the infrastructure at the center in purple, its members on one side, the clients behind them, the infrastructures it hands off to on the other, and the overseer; the strip above it is the profile (owner, what it handles, members, links, overseer, the clock). Columns are the parties, rows the phases; numbered steps are messages, deliveries, payments or reports between them, with the channel or system in the pill. Hover a step for the detail, click it or use the walkthrough to be taken through the diagram step by step. The institutions are the subject; the products they handle are on the investment dealer, buy-side and other Canadian pages of this set, and the foreign bank page shows the same infrastructures from a Schedule III branch’s side. Canadian market conventions and CAD throughout; all numbers illustrative. New to this? Begin with Start here.
Institution
Product
TMX Group
Cboe Canada and Nasdaq Canada
CanDeal, the Auctions and the Swap Market
Payments Canada
The Bank of Canada
CLS
How the diagrams work, the chain every service is a link of, a map of the services by institution, who owns and oversees each, and a glossary.
TMX Group, the listed company that owns the Canadian market’s senior and junior equity exchanges, its only derivatives exchange, its depository and its two clearing houses since the Maple transaction of 2012: five services on this page, each with its own mechanics. The TSX equities day with the market makers, broker preferencing and the market on close under the order protection rule; TSX Venture with the capital pool companies and TSX Alpha with its speed bump and inverted fee; the Montréal Exchange, where the Canadian yield curve trades in CORRA and bond futures 20.5 hours a day; CDCC, the clearing house of every MX contract and of the Government of Canada repo; and CDS, the depository and the equity clearing house in one system, settling its funds through Lynx at the Bank of Canada.
OwnerTMX Group, listed on the TSX; the Toronto Stock Exchange of 1861 demutualized in 2000, merged with the Montréal Exchange in 2008, bought by the Maple consortium with CDS and Alpha in 2012.
What it runsThe TSX, TSX Venture and TSX Alpha; the Montréal Exchange; CDS and CDCC; the TMX Information Processor, Shorcan, a stake in CanDeal, the data and index businesses, Trayport abroad.
How a trade movesAn equity trade matched on the TSX goes to CDS for CNS and settles in CDSX on T+1; a futures trade on the MX clears at CDCC; a Government of Canada repo nets at CDCC and settles in CDSX; the funds settle through Lynx at the Bank of Canada.
Overseen byThe OSC as the lead recognizing regulator of TMX, the TSX, Alpha, CDS and CDCC; the AMF for the MX and CDCC; the BCSC and the ASC for TSX Venture; the Bank of Canada for CDSX and CDCC under the PCSA; CIRO for the trading.
The two foreign exchange groups in the Canadian equity market, each a recognized exchange competing with the TMX books for the order flow under the order protection rule: two services on this page. Cboe Canada, the former NEO, with the ETF and depositary receipt listings and four books that each take a position on speed and transparency, plus the MATCHNow dark pool and the BIDS block platform; and Nasdaq Canada, three books on the INET engine (a lit maker-taker book, an inverted book that pays the retail flow a rebate, a dark book at the midpoint) with no listings at all. Both clear at CDS, consolidate into the TMX IP and answer to CIRO like every Canadian marketplace.
OwnerCboe Global Markets (Cboe Canada, the NEO Exchange of 2015 acquired in 2022; MATCHNow acquired in 2020) and Nasdaq, Inc. (the Chi-X Canada ATS of 2008 acquired in 2016).
What they runCboe Canada’s four books and its listings, MATCHNow and BIDS Canada; Nasdaq Canada’s CXC, CX2 and CXD; together about a third of the Canadian equity volume, illustrative.
How a trade movesAn order routed by a dealer’s smart order router matches on one of the books and goes to CDS as locked in for CNS, settling in CDSX on T+1 beside the TSX trades; the data goes to the TMX IP, the surveillance to CIRO.
Overseen byThe OSC as the recognizing regulator of both exchanges and of the ATSs; CIRO under UMIR as the regulation services provider; the CSA’s marketplace rules (NI 21-101, NI 23-101).
The venues of the Canadian fixed income and derivatives markets outside the exchanges, where the six bank-owned dealers are the market and the platforms the way to reach them: three services on this page. CanDeal, the dealer-to-client request-for-quote platform the dealers own with TMX, with its evaluated prices and Term CORRA; the Government of Canada auctions, run by the Bank of Canada as fiscal agent through its own system with the primary dealers bidding under their limits and the bonds issued into CDS; and the Canadian dollar swap, executed on American screens, cleared in London at LCH’s SwapClear under a Canadian mandate and reported to repositories in New York.
OwnerCanDeal: the six banks’ dealers and TMX; the auctions: the Government of Canada with the Bank of Canada as fiscal agent; the swap infrastructure: LCH (LSEG), Tradeweb, Bloomberg, the interdealer brokers, DTCC, CME and ICE.
What they runThe RFQ market in Government of Canada, provincial and corporate bonds and money market; the primary issuance of the federal debt; the execution, clearing and reporting of the Canadian dollar swaps.
How a trade movesA bond bought by RFQ on CanDeal settles trade for trade in CDSX on T+1 and is reported to CIRO; a bond bought at auction is issued into CDS against payment to the Receiver General; a CAD swap novates at LCH within seconds and is reported to a designated repository by T+1.
Overseen byThe OSC and CIRO for the ATSs and the dealers; the Minister of Finance and the Bank of Canada for the auctions; the CSA, OSFI and the Bank of Canada (through the Bank of England) for the swaps.
The banks’ own association under the Canadian Payments Act, owner and operator of the national payment systems that settle on the Bank of Canada’s books, with the Interac network beside it: three services on this page. Lynx, the real-time gross settlement system of the Canadian dollar since 2021, open from half past midnight for the CLS pay-ins and settling every large payment and every FMI’s cash leg final on the settlement accounts; the ACSS, the retail batch system where a dozen direct clearers exchange the cheques, the payroll files, the bill payments and the Interac items by stream and settle net the next morning with the value backdated; and Interac, the bank-owned network whose e-Transfers and debit purchases are real time for the customer and net through the ACSS, with the Real-Time Rail now launching to settle them in central bank money in seconds.
OwnerPayments Canada (the Canadian Payments Association, member-funded) for Lynx, the ACSS and the Real-Time Rail; Interac Corp., owned by the banks and the centrals, for e-Transfer and Interac Debit.
What they runThe real-time gross settlement of the Canadian dollar in central bank money; the deferred net settlement of the retail batch streams; the real-time retail transfers and debit; the instant rail settling in central bank money as it launches.
How a payment movesA wire settles on the settlement accounts at the Bank of Canada at once; a payroll file or a cheque is exchanged between the direct clearers and settled net the next morning; an e-Transfer reaches the recipient in seconds and settles through the ACSS; an RTR payment will settle in seconds in central bank money.
Overseen byThe Bank of Canada under the PCSA (Lynx as systemic; the ACSS and Interac e-Transfer as prominent); the Minister of Finance for the by-laws and the rules; the Department of Finance for the legislation; the RPAA for the PSPs.
The central bank as the settlement layer of the whole chain: one service on this page, the Bank of Canada itself, which runs no payment system but holds the settlement accounts every Canadian dollar payment ends on, supplies the collateralized liquidity behind Lynx, steers the overnight market with its repos and its floor, runs the government’s auctions and cash as fiscal agent, and designates and oversees the systemic and prominent systems under the Payment Clearing and Settlement Act, from the domestic ones to CLS and SwapClear abroad.
OwnerA Crown corporation under the Bank of Canada Act of 1934, its profits to the Receiver General; the Governor appointed with the Government’s approval; the monetary policy under the inflation-control agreement with the Minister of Finance.
What it runsThe settlement accounts and the Standing Liquidity Facility; the overnight and term repos and the securities repo operations; the auctions and the Receiver General’s cash; the oversight of the designated FMIs; the supervision of the retail payment service providers under the RPAA.
How money movesEvery Lynx payment, every CDS funds settlement, every CLS pay-in in Canadian dollars and every ACSS net position settles on the settlement accounts at the Bank; the operations settle in CDSX against the same accounts; the government’s cash is auctioned back to the banks through Lynx.
Overseen byThe Minister of Finance under the Bank of Canada Act and the PCSA; Parliament; the inflation-control agreement renewed every five years; the Department of Finance for the payments legislation.
CLS, the FX settlement system the banks built in 2002, seen from the Canadian dollar: one service on this page, the pay-ins through Lynx in the Canadian night to CLS’s settlement account at the Bank of Canada, the settlement payment versus payment across the central bank accounts, the pay-outs by six in the morning and the same-day session for USD/CAD in the afternoon; the first foreign system the Bank of Canada designated, and the reason Lynx opens at half past midnight.
OwnerCLS Group Holdings, owned by about 70 settlement member banks; CLS Bank International, an Edge corporation under the Fed; the Canadian dollar one of the seven original currencies of 2002.
What it runsThe payment-versus-payment settlement of the Canadian dollar legs of the FX trades across its accounts at the Bank of Canada and the other central banks; the same-day USD/CAD session; CLSNet for the currencies outside.
How a trade movesA USD/CAD trade submitted on T is netted into the pay-in schedule, funded through Lynx between 01:00 and 06:00 ET, settled on CLS’s books both legs at once and paid out through Lynx the same morning.
Overseen byThe Bank of Canada under the PCSA since 2002; the Federal Reserve as the primary supervisor; the CLS Oversight Committee of the 18 central banks.
How to read a diagram
Columns are the partiesThe investors on the left, then the members (the investment dealers, the banks and the custodians that hold the membership), the infrastructure itself in the middle in purple (the service the diagram is about), the other participants (the market makers, the other side, the trade sources), the infrastructures it hands off to (the clearing house behind an exchange, the depository and Lynx behind a clearing house, the Bank of Canada behind everything) and the overseer on the right.
Rows are the phasesTime runs down the page in the service’s own cycle: the opening call to the market on close for an exchange, trade capture to netting to settlement for a clearing house, the instructions to the end-of-day funds for the depository, the pay-ins to the pay-outs for CLS, the half-past-midnight open to the close for Lynx. The band label gives the timing.
Arrows are stepsNumbered in order. Solid arrows are messages, deliveries or payments; dashed ones are standing flows like reports and oversight; two-headed ones are exchanged or matched. Boxes on the infrastructure’s own lifeline are what it does internally: a novation, a netting run, a settlement batch.
Pills are the channelAmber for voice and chat, blue for electronic platforms and portals, rose for SWIFT messages, grey for infrastructure and regulatory systems (the matching engines, the clearing portals, Lynx, the repositories), teal for market data, lavender for the members’ internal systems. Each pill shows a one-line definition on hover.
The strip is the profileAbove each diagram the worked example strip gives the institution’s profile: who owns it, what it handles with illustrative volumes, who its members are, what it links to, who oversees it, and the clock of its cycle. Hovering a step shows the full detail; clicking it opens the walkthrough.
The grouping is by institutionThe area tabs are the groups that run the services (TMX Group, Cboe Canada and Nasdaq Canada, CanDeal with the auctions and the swap market, Payments Canada, the Bank of Canada, CLS) and the product tabs under each are the services with their own mechanics; the facts table below lists every service with the same five columns. The flags open the same chain for the other jurisdictions, where the institutions differ.
A flow can be read two ways: scroll the diagram and hover for detail, or press Walk through the steps above any diagram to follow it one step at a time, with the detail in a card. The arrow keys move forward and back.
The chain every diagram is a link of
BankThe infrastructureClientMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Internal systemhover an arrow or a badge for the full detail
Every diagram on this page is one link of this chain seen from inside: the marketplace that matches (an exchange, an ATS, a platform), the clearing house that novates and nets, the depository that settles against the funds, and the Bank of Canada where the funds become final through Lynx; the investment dealer carries the investor through the chain as the member the investor is not, and the regulators read the record at each link. What the Canadian version shows is a market of several marketplaces and one clearing house per asset class inside one group (TMX owns the senior exchange, the derivatives exchange, the depository and both clearing houses), with the swaps cleared abroad, the payment systems run by the banks’ association and everything settling in the end on the settlement accounts at the Bank of Canada.
The flows, 15 of them
Each card opens its diagram. The tabs at the top do the same; the search box finds a flow by name, rule, report or keyword.
Who owns each service, what it handles, who its members are, what it links to, who oversees it
The same five questions for every service. The answers are what distinguish the Canadian infrastructure: one listed group owning the senior exchange, the derivatives exchange, the depository and both clearing houses, the foreign exchange groups competing for the equity flow under the order protection rule, the swaps cleared in London under a Canadian mandate, the payment systems run by the banks’ association, and the Bank of Canada at the end of every chain as the holder of the settlement accounts and the overseer of the designated systems.
CLS Group, owned by the member banks; an Edge corporation; a system designated under the PCSA
the Canadian dollar legs of the FX trades, payment versus payment; USD 500,000,000,000 a day with a CAD leg; the same-day USD/CAD session
the Canadian banks and the foreign settlement members; the third parties through them
Lynx and CLS’s account at the Bank of Canada; Fedwire, T2, CHAPS and the other RTGS systems
the Bank of Canada since 2002; the Fed; the CLS Oversight Committee
Glossary
The terms that come back on every diagram. Every pill in the diagrams also shows its definition on hover.
Concepts, terms and rules
Order protection rule: NI 23-101’s rule that a marketplace may not execute a trade at a price worse than a better-priced visible order on another protected marketplace; dealers meet it with smart order routers or directed action orders.
Broker preferencing: The Canadian marketplace convention that an incoming order matches first against resting orders from the same dealer at the best price, ahead of time priority; part of why internalization happens on the marketplace in Canada.
Calculated opening price: The single price the TSX computes and publishes during the pre-open (from 07:00 ET) at which the opening orders of a security would match with the most volume; the price of the opening call at 09:30 unless the book changes; the Canadian counterpart of the NYSE’s indicative opening price.
Market on close: The TSX’s closing facility: market-on-close orders enter from 07:00 to 15:50 ET, the imbalance is published at 15:50, the offsetting limit-on-close orders enter until 16:00, and the closing call matches at 16:00 within the price movement constraint of the 2021 redesign; the official closing price the S&P/TSX indexes and the funds are valued at, and the trade of the day for the index money.
Minimum guaranteed fill: The TSX market maker’s obligation to fill small retail market orders (up to a set size per security) at the best price when the book is thin, so that retail orders do not sweep the book.
Speed bump: A deliberate delay a marketplace imposes on some orders to protect the liquidity providers from the fastest takers: TSX Alpha delays every active order by a random one to three milliseconds and spares the post-only orders above a minimum size; Cboe Canada’s NEO-N delays the active orders of the traders it classifies as latency sensitive; the CSA keep the delayed books’ quotes unprotected under the order protection rule.
Inverted fee model: The fee model in which the active order earns a rebate and the resting order pays, the reverse of maker-taker; TSX Alpha and Nasdaq CX2 are the inverted books of the Canadian market, where the retail dealers route their active flow for the rebate, the Canadian substitute for the payment for order flow the rules do not allow.
Dark rules (Canada): The CSA’s 2012 amendments to NI 23-101 requiring a dark order (one not displayed) to give meaningful price improvement over the Canadian best bid and offer (a full tick, half a tick when the spread is a tick) unless it meets the minimum size, and giving the displayed orders priority at the same price on the same marketplace; the rules keep the Canadian dark share under 10% (illustrative) and bar the dealers’ internalization without improvement.
Single-stock circuit breaker: CIRO’s halt of a single security for five minutes when its price moves 10% in five minutes (20% for the smaller securities), coordinated with the US limit up-limit down bands for the interlisted stocks; the Canadian market-wide circuit breakers follow the US triggers on the S&P 500.
Market-wide circuit breaker: The halts of every US exchange at a 7%, 13% and 20% decline of the S&P 500 from the previous close (15 minutes for the first two, the rest of the day for the third), triggered in March 2020 four times.
Interlisted stock: A Canadian issuer listed on the TSX and on a US exchange (the NYSE or Nasdaq), trading in both markets and both currencies: some 200 names, the banks, the energy and mining companies, the railways; the dealers and the HFT firms arbitrage the two markets, the settlement runs through the CDS link to DTC, and the Canadian halts and bands are coordinated with the US ones for these securities.
Capital pool company: TSX Venture’s program under which a shell with no business lists with seed capital and a small public offering and must complete a qualifying transaction (the acquisition of a business) within 24 months, after which it trades as an ordinary issuer; the Canadian way of taking a small business public through a shell, the counterpart of the US SPAC on a far smaller scale.
Canadian depositary receipt: A CDR: a receipt sponsored by CIBC, listed on Cboe Canada since 2021, that holds a US (or European) stock with a currency hedge into Canadian dollars and trades in Canadian dollars in small denominations, so that a retail investor holds a fraction of a foreign share without the currency exposure; settled at CDS like any Canadian security; the MX lists options on them.
Vertical silo: The US futures model in which the exchange owns the clearing house that clears its contracts and the open interest cannot move to another; the contracts of competing exchanges are not fungible; the opposite of the horizontal model of the equities and the options.
Horizontal clearing: One clearing house serving every venue in an asset class (NSCC for the equities, OCC for the options), so that a position opened on one exchange can be closed on another and the exchanges compete for the order flow alone.
Novation: The legal step by which one trade between two parties becomes two trades with the clearing house in the middle.
Netting: Offsetting all of a firm’s buys and sells of the same thing into one net delivery or payment.
CDS CNS: CDS’s continuous net settlement: eligible exchange and ATS trades novated to CDS and netted to one position per participant per security per day, with fails carried forward; the Canadian equivalent of NSCC’s CNS, inside the same system as the depository.
Clearing fund: The collateral each NSCC or OCC member posts to the clearing house against its unsettled positions; the first loss layer if a member defaults.
Guarantee fund: The prefunded contributions of a clearing house’s members (the clearing fund at NSCC, OCC and FICC, the guarantee fund at CME and ICE) that stand behind the margin in the default waterfall, sized to the default of the largest member or the two largest under stress.
Default waterfall: The order in which a clearing house absorbs a defaulting member’s losses: the defaulter’s margin and fund contribution, the clearing house’s own contribution, the surviving members’ fund, the assessments on the members, then the recovery tools.
Skin in the game: The clearing house’s own capital placed in the default waterfall ahead of the surviving members’ contributions, the subject of the standing argument between the CCPs and their members on how much it should be.
Extender of credit: In CDSX, the designated bank that extends a participant a line of credit and guarantees its end-of-day funds settlement; the participant’s net debit cap in CDSX is set by that line and the collateral it holds, and the bank pays the participant’s net debit through Lynx at the end of the day; the large banks are their own; the model puts the banks behind the participants where DTC puts its own liquidity.
Aggregate collateral value: CDSX’s measure of the collateral in a participant’s account (the securities received, at haircuts) against which its net funds debit must be covered during the settlement day; with the cap set by the designated bank’s line, the control that lets a delivery settle or makes it pend.
CDS & Co.: CDS’s nominee, in whose name the Canadian securities deposited at CDS are registered on the issuers’ and the transfer agents’ registers, with the participants’ positions on CDSX and the beneficial owners on the participants’ books; the Canadian counterpart of Cede & Co.
Immobilization: Holding the securities’ certificates in a depository’s vault (or dematerialized) so that ownership moves by book entry rather than by delivery of the paper; DTC’s purpose since 1973.
Institutional trade matching: NI 24-101’s requirement that the dealers, the advisers and the custodians match the details of an institutional trade (the confirmation and the affirmation, on CTM or CDS’s matching) by the end of the trade date since T+1, so that the trade settles trade for trade in CDSX on T+1; the exception reporting to the regulators tracks the matching rates.
Entitlements: The dividends, interest and redemption payments on the securities held at the depository, collected by CDS from the issuers’ transfer agents (and from the Bank of Canada as the government’s paying agent) and credited to the participants, who pay the beneficial owners; CAD 400,000,000,000 a year, illustrative.
T+1: The settlement cycle of the US securities market since May 28, 2024 (Canada and Mexico the day before), one business day after the trade, which halved the margin NSCC holds and set the 21:00 ET affirmation deadline on the trade date; the UK and the EU follow in October 2027.
Delivery versus payment: A settlement in which the securities are delivered only if the payment is made and the payment made only if the securities are delivered, removing the principal risk; model 1 settles both gross and simultaneously (Fedwire Securities), model 2 the securities gross and the cash net (DTC).
Payment versus payment: A settlement in which the two currency legs of an FX trade are settled together or not at all, removing the Herstatt risk; CLS’s mechanism across its accounts at the central banks.
Herstatt risk: The settlement risk of paying one currency of an FX trade before receiving the other, named for Bankhaus Herstatt, closed in June 1974 after receiving its Deutsche mark legs and before paying its dollar legs; the risk CLS was built to remove.
Real-time gross settlement: A payment system that settles each payment individually and finally in central bank money as it arrives, with no netting and no settlement risk between the participants (Fedwire, T2, CHAPS, Lynx), at the cost of the liquidity each payment needs.
Liquidity-saving mechanism: Lynx’s second settlement mechanism: the payments are queued and offset bilaterally and multilaterally against the incoming payments through the day, with the net settled from the participant’s balance and a minimum liquidity of 1% of its average daily value sent, so that the day’s value settles on a fraction in balances; the design T2 and the other RTGS systems share.
Urgent payment mechanism: Lynx’s first settlement mechanism: the payment settles at once against the sending participant’s settlement balance, for the time-critical payments (the CLS pay-ins, the CDS settlement, the Bank of Canada’s operations); the alternative to the liquidity-saving mechanism’s queue.
Settlement balances: The balances the Lynx participants hold on their settlement accounts at the Bank of Canada, the Canadian counterpart of the reserves in a country with no reserve requirement; abundant since the quantitative easing of 2020 (CAD 60,000,000,000 at the steady state the Bank targets, illustrative), paid the deposit rate and the base of the floor system.
Floor system: The Bank of Canada’s framework since 2020 in which the abundant settlement balances keep the overnight rate at the target because the banks can deposit at the deposit rate (the floor, 5 basis points below the target since January 2025) and borrow at the bank rate (25 basis points above), where the corridor system before 2020 kept the balances near zero and the target in the middle.
Deposit rate: The rate the Bank of Canada pays on the Lynx participants’ settlement balances, 5bp below the policy rate since January 2025, the floor of the overnight market; reachable by a foreign bank branch only through its correspondent unless it is a participant.
Bank rate: The rate at which the Bank of Canada lends overnight to the Lynx participants through the Standing Liquidity Facility, 25 basis points above the target for the overnight rate; the top of the operating band whose bottom is the deposit rate.
Standing Liquidity Facility: The Bank of Canada’s facility through which a Lynx participant draws intraday advances against the collateral it has pledged at the Bank (the Government of Canada and provincial securities, the NHA mortgage-backed securities, the covered bonds and the other eligible assets, at haircuts, valued each morning), repaid by the close or converted into an overnight advance at the bank rate; the collateral the LVTS used for its guarantee now backs this.
Standing Term Liquidity Facility: The Bank of Canada’s facility since 2020 lending for a month to a sound bank against a wider pool of collateral including the mortgages, beside the Standing Liquidity Facility’s intraday and overnight advances, the Emergency Lending Assistance for a solvent institution or an FMI, and the Contingent Term Repo Facility the Bank activates in a market-wide stress.
Overnight repo operations: The Bank of Canada’s overnight repos (buying securities from the primary dealers against cash) and overnight reverse repos (the opposite), announced in the morning when CORRA drifts from the target and settled in CDSX against the settlement accounts; the term repos manage the balances over longer horizons.
Securities repo operations: The Bank of Canada’s overnight lending of the Government of Canada securities it holds to the primary dealers against cash, to keep the repo market supplied with the bonds the Bank’s purchases took out of it; the counterpart of the Fed’s securities lending.
Backdated settlement: The ACSS’s settlement of the net positions on the direct clearers’ accounts at the Bank of Canada on the morning of the next business day with the value backdated to the day of the exchange, so that the interest and the customers’ value dates reflect the exchange day; the overnight exposure is covered by the collateral of the ACSS risk model.
Direct clearer: A Payments Canada member that meets the volume threshold and the operational requirements to exchange the retail items in the ACSS and settle on its own settlement account at the Bank of Canada; about a dozen (the large banks, Desjardins, the credit union centrals, the Bank of Canada); the other members are indirect clearers through them.
Autodeposit: The Interac e-Transfer feature by which a recipient registers an email address or a mobile number with a bank account so that the transfers are credited at once without a security question; the default for most users and the point of the name-matching controls against the misdirected transfers.
Multiple-price auction: The Government of Canada’s auction format: the bids are allocated from the lowest yield up and each winner pays the yield it bid (the discriminatory auction), where the US Treasury uses the single price; the Bank of Canada’s studies have kept it for the bills and the nominal bonds.
Bidding limit: The maximum share of a Government of Canada auction a government securities distributor may bid for with its customers, set by the Bank of Canada under its Terms of Participation by the distributor’s share of the auctions and the secondary market, up to a quarter of an auction for a primary dealer; with the net position reporting, the control against a squeeze.
When-issued market: The trading of a Government of Canada bill or bond between the auction announcement and the issue date, before the security exists, settled against the auction results on the issue date; the Bank of Canada’s Terms of Participation require the distributors to report their net positions in it.
Repo 2.0: CDCC’s program to extend its fixed income CCP service: the modernization of the existing repo clearing and the cleared general collateral repo through the CCMS triparty service in 2026 and 2027, then the sponsored and agent access for the buy side in 2028 and 2029, modeled on FICC’s models and encouraged by the Bank of Canada’s review of the repo market.
Sponsored clearing: A clearing member bringing its clients’ trades into the clearing house under its own membership; at FICC, the netting member sponsors money funds, hedge funds and asset managers into the CCP, submits their Treasury and repo trades, guarantees their performance and margins them.
Mandatory clearing (NI 94-101): National Instrument 94-101: the interest rate swaps in CAD, USD, EUR and GBP (and the related basis swaps, FRAs and OIS) between the clearing participants of a regulated clearing agency and the large counterparties must be cleared at a regulated clearing agency (LCH, CME, CDCC); the end users below the thresholds trade bilaterally.
NI 94-102: The CSA’s rule on customer clearing and the protection of customer collateral and positions, the Canadian counterpart of the CFTC’s segregation and LSOC rules: a clearing member holds its clients’ cleared derivatives collateral in segregated accounts at the clearing agency so that the positions and the collateral can be ported in a default.
Guideline E-22: OSFI’s margin requirements for non-centrally cleared derivatives, applying the Basel-IOSCO standard (variation margin daily, initial margin above the thresholds) to the federally regulated financial institutions, foreign bank branches included.
OSC Rule 91-507: Ontario’s trade repositories and derivatives data reporting rule (with the Québec and Manitoba equivalents) requiring every derivative with an Ontario counterparty to be reported to a designated trade repository by the reporting counterparty, with the lifecycle, valuation and collateral data; rewritten in 2025 on the UTI, the UPI and the critical data elements aligned with the CFTC’s rules.
MI 96-101: Multilateral Instrument 96-101, the trade repositories and derivatives data reporting rule of the provinces other than Ontario, Québec and Manitoba, with the same reporting to the designated repositories (DTCC’s DDR, CME’s, ICE Trade Vault); amended with OSC Rule 91-507 in 2025.
UTI and UPI: The unique transaction identifier and the unique product identifier of the global derivatives reporting standards, adopted by the CFTC, the EU and the UK between 2022 and 2024 with the critical data elements, so that a swap is reported the same way to every repository.
LEI: The legal entity identifier, the 20-character code identifying the parties to the financial transactions under the Global LEI Foundation’s system, required on the derivatives reports and much else since 2012.
Prominent payment system: A payment system the Bank of Canada designates under the PCSA (since the 2014 amendments) for the payment system risk it carries rather than systemic risk, subject to lighter standards than the systemic systems: the ACSS since 2016 and Interac e-Transfer since 2020.
PCSA: The Payment Clearing and Settlement Act of 1996: the statute under which the Bank of Canada designates and oversees the clearing and settlement systems that could pose systemic risk (Lynx, CDSX, CDCC, CLS Bank, LCH’s SwapClear) or payment system risk (the ACSS, Interac e-Transfer), applies its risk management standards, reviews their rules and can issue directives; it also gives the netting and the settlement finality their legal protection; the designations need the Minister of Finance’s agreement.
Reports, tapes and data
TMX IP: The information processor under NI 21-101: the consolidated feed of orders and trades from every Canadian marketplace; trades are reported to it by the marketplace, not by the dealer.
Surveillance feed: The real-time order and trade data every marketplace sends to CIRO Market Surveillance, with the client identifiers and regulatory markers each dealer puts on its orders under UMIR; Canada’s audit trail for equities.
MTRS 2.0: CIRO’s debt trade reporting system: every dealer reports its fixed income trades, with the counterparty type and the price, by the next business day; used for surveillance and market transparency.
Debt information processor: CIRO’s role under NI 21-101 as the information processor for the debt market, publishing the post-trade data of the corporate bond trades (since 2016) and the government bond trades (later) from the dealers’ debt transaction reports, with a delay and the sizes capped; the Canadian counterpart of TRACE, built by the regulator.
Trade repository: A designated trade repository (DTCC’s DDR, CME’s or ICE’s) to which Canadian derivatives trades are reported under the provincial trade reporting rules (OSC Rule 91-507 and its equivalents), by the dealer side where one of the parties is a dealer.
CanDeal DNA: CanDeal Data and Analytics: the evaluated prices of the Canadian fixed income market built from the platform’s quotes and trades and the dealers’ marks, used by the custodians, the fund administrators and the managers for the valuations; the by-product of the RFQ platform’s trades.
CORRA: The Canadian Overnight Repo Rate Average, the Bank of Canada’s overnight benchmark that replaced CDOR in June 2024; the reference for repo, floating rate notes and derivatives.
Term CORRA: The forward-looking one- and three-month term rates derived from the CORRA futures and published by CanDeal Benchmark Solutions since 2023, used for the loans that priced on CDOR until June 2024.
SEDAR+: The CSA’s filing system since 2023 for prospectuses, continuous disclosure, exempt distribution reports and insider reports (with SEDI).
Infrastructure, agencies and authorities
OSC: The Ontario Securities Commission: the principal regulator for most Canadian dealers and managers, acting with the other provincial regulators through the CSA (the Canadian Securities Administrators); the Canadian counterpart of the SEC for an Ontario firm.
CSA: The Canadian Securities Administrators: the umbrella of the provincial and territorial securities regulators (the OSC, the AMF, the BCSC, the ASC and the others), which write the National Instruments and oversee CIRO; there is no federal securities regulator.
AMF (Québec): The Autorité des marchés financiers, Québec’s securities and financial regulator, one of the CSA: the dealers’ exemption notices for their Québec clients, the Québec derivatives rules, the supervision of the Québec-chartered institutions.
BCSC: The British Columbia Securities Commission, the lead recognizing regulator of TSX Venture with the ASC, a recognizing regulator of CDS and the CSE, and the regulator of the Vancouver side of the junior market and its enforcement cases.
ASC: The Alberta Securities Commission, the lead recognizing regulator of TSX Venture with the BCSC and the regulator of the Calgary energy issuers; one of the CSA’s principal regulators under the passport system.
CIRO: The Canadian Investment Regulatory Organization: the self-regulatory organization for investment dealers, mutual fund dealers and marketplace trading since the 2023 merger of IIROC and the MFDA; its Investment Dealer and Partially Consolidated (IDPC) Rules and UMIR are the dealer rulebook.
UMIR: The Universal Market Integrity Rules: CIRO’s rules for trading on Canadian marketplaces (order exposure, trading on a marketplace, short sale marking, client-principal trading, best price, manipulation), applied by its Market Surveillance.
Bank of Canada: Canada’s central bank: sets the target for the overnight rate, runs Lynx’s settlement balances and the standing liquidity facility, acts as the government’s fiscal agent for the auctions, and oversees CDS, CDCC and Lynx as systemically important.
Payments Canada: The organization that owns and operates the national payment systems (Lynx, the ACSS, the Real-Time Rail in development) under the Canadian Payments Act; the banks, the authorized foreign banks and the other eligible institutions are its members, and the Lynx participants a subset.
Department of Finance (Canada): The federal department that owns the financial sector and payments legislation (the Bank Act, the Canadian Payments Act, the PCSA, the RPAA), the Debt Management Strategy and the borrowing program, the code of conduct for the card networks and the policy on the payment systems the Bank of Canada administers and oversees.
Minister of Finance (Canada): The federal minister who grants, on OSFI’s recommendation, the order authorizing a foreign bank to carry on business in Canada through a branch, sets its conditions and may vary or revoke it.
OSFI: The Office of the Superintendent of Financial Institutions: the federal prudential regulator of the Canadian banks and insurers, which sets their capital (CAR), liquidity (LAR) and margin (E-22) rules.
RPAA: The Retail Payment Activities Act of 2021: the non-bank payment service providers (the wallets, the money transfer companies, the processors) register with the Bank of Canada (from November 2024) and meet its operational risk and safeguarding-of-funds requirements (from September 2025) under the Bank’s supervision; the registered providers became eligible for Payments Canada’s membership in September 2025.
Canadian Payments Act: The statute under which Payments Canada (the Canadian Payments Association) owns and operates the national payment systems with a public purpose, its by-laws approved by the Minister of Finance; amended in June 2024, in force since September 29, 2025, to open the membership to the payment service providers registered under the RPAA, the credit union locals and the designated clearing houses.
TMX Group: The listed company that owns the TSX, TSX Venture and TSX Alpha, the Montréal Exchange, CDS and CDCC, the TMX Information Processor, Shorcan, a stake in CanDeal, the data and index businesses and Trayport abroad; the Toronto Stock Exchange demutualized in 2000 and listed in 2002, merged with the MX in 2008, acquired by the Maple consortium with CDS and Alpha in 2012 under the regulators’ conditions.
TSX: The Toronto Stock Exchange, the TMX senior equity exchange; TSX Venture for junior issuers; both with market maker programs and broker preferencing.
TSX Venture: The junior exchange of TMX Group, the Canadian Venture Exchange of 1999 (from the Vancouver and Alberta stock exchanges) acquired by the TSX in 2001: the listing venue of the exploration and early-stage companies and the capital pool companies, trading on the TSX’s engine and rules, recognized by the BCSC and the ASC as lead regulators; the graduations feed the TSX.
TSX Alpha: TMX Group’s inverted exchange, the dealer-owned ATS of 2008 acquired in 2012 and redesigned in 2015 with a randomized speed bump on the active orders, undelayed post-only orders above a minimum size and a rebate to the taker; recognized by the OSC with its quotes unprotected under the order protection rule.
Montreal Exchange: Canada’s derivatives exchange (the TMX group): the CORRA futures (the successor of the BAX), the Government of Canada bond futures, the index and equity options, cleared at CDCC.
CDCC: The Canadian Derivatives Clearing Corporation, the TMX company that clears the Montréal Exchange’s options and futures and, since 2012, repo on Government of Canada securities; the Canadian OCC and FICC in one.
CDS: CDS Clearing and Depository Services, the TMX company that is Canada’s depository and the clearing house for its equities and bonds; participants are dealers, banks and custodians; overseen by the Bank of Canada and the provincial regulators.
CDSX: CDS’s clearing and settlement system: trades confirmed, netted in CNS or settled trade for trade, securities moved by book entry and the net funds settled through the participants’ settlement banks at Lynx at the end of the day.
CCMS: The Canadian Collateral Management Service, the domestic triparty collateral service launched by TMX and Clearstream in 2024 for repo and securities lending in Canadian collateral.
Cboe Canada: The exchange formerly NEO, part of Cboe since 2022, with its lit, dark and market maker books; Cboe also runs the MATCHNow dark ATS.
MATCHNow: The largest Canadian dark ATS, acquired by Cboe in 2020: continuous matching at the midpoint with broker preferencing, the randomized call auctions and the price improvement the dark rules require; a registered dealer and CIRO member running a marketplace, its trades cleared at CDS.
Cboe BIDS Canada: Cboe’s conditional block trading platform in Canada since 2022, where the buy side’s large orders are matched as conditionals and firmed up for the execution without being displayed; an ATS beside MATCHNow.
Nasdaq Canada: Nasdaq’s Canadian marketplaces: the CXC and CX2 lit books and the CXD dark book.
CSE: The Canadian Securities Exchange, a recognized exchange since 2004 (the former CNQ) listing the junior companies TSX Venture does not take or that prefer its lighter requirements (the cannabis issuers, the crypto miners, the US-domiciled small caps) and trading them on its own books; a few hundred listings and a few percent of the Canadian volume, illustrative; recognized by the OSC and the BCSC.
Tradelogiq: The operator of the Omega and Lynx ATS marketplaces, the independent alternative trading systems of the Canadian equity market with a lit maker-taker book and a lit inverted book, a few percent of the volume (illustrative); not to be confused with Lynx, the payment system.
CanDeal: The Canadian multi-dealer fixed income platform for institutional RFQs in Government of Canada, provincial and corporate bonds and money markets, owned by the bank-owned dealers and TMX.
CBID: The Canadian retail and institutional fixed income marketplace where dealers post offerings and advisors buy for client accounts.
Shorcan: The TMX interdealer broker for Government of Canada bonds, the Canadian BrokerTec.
LCH SwapClear: LCH Ltd’s interest rate swap clearing service in London, the largest in the world, clearing the dealers’ and their clients’ swaps in the major currencies; supervised by the Bank of England, recognized by ESMA and the CFTC.
Lynx: Canada’s high-value payment system, operated by Payments Canada since 2021 (the successor to LVTS): real-time settlement in Bank of Canada funds; the dealers’ settlement banks pay CDS obligations through it.
ACSS: The Automated Clearing Settlement System: Payments Canada’s retail system that nets the cheques, the direct debits and credits and the bill payments for settlement at the Bank of Canada the next morning; the direct clearers settle it, the indirect clearers through them.
Interac: Interac Corp., the bank-owned network (the Interac Association of 1984 merged with Acxsys in 2018) running Interac e-Transfer and Interac Debit: real time for the customer, settled net among the direct clearers through the ACSS at the Bank of Canada the next morning; e-Transfer a prominent payment system under the PCSA since 2020; the network operates under the Competition Tribunal’s consent order of 1996 that opened it.
Interac e-Transfer: The transfer of money to an email address or a mobile number through the banks’ apps on Interac’s network, launched in 2003: the sender debited at once, the recipient credited within seconds on autodeposit or acceptance on the receiving bank’s own credit, the interbank settlement net through the ACSS the next morning; 1,500,000,000 a year worth CAD 500,000,000,000 (illustrative); a prominent payment system since 2020, migrating to the Real-Time Rail.
Real-Time Rail: Payments Canada’s instant payment system: each payment exchanged, cleared and settled in seconds, final, in central bank money on the participants’ RTR settlement accounts at the Bank of Canada, around the clock, on ISO 20022 with a centralized fraud service; the by-law and the rules in effect since August 24, 2026, the first direct participants planned for the fourth quarter of 2026, the expansion and the migration of the e-Transfers in 2027.
CLS: CLS Bank settles both sides of a currency trade at the same moment (payment versus payment) so neither party pays without receiving.
CLSNet: CLS’s bilateral netting calculation service for the FX trades in the currencies and between the counterparties outside the CLS settlement, which standardizes the netting without the payment-versus-payment settlement.
DTC: Depository Trust Company: holds nearly all US stocks, corporate bonds and money market instruments in book-entry form and moves them against payment.
New York Link: CDS’s link to DTC and NSCC (with the DTC Direct Link) through which a Canadian participant settles its US trades and holds its US securities through CDS’s accounts at the US depository and clearing house, the route of the interlisted stocks and the US securities of the Canadian investors between the two depositories.
Receiver General: The federal government’s cash manager, whose balances at the Bank of Canada are the government’s operating account; the balances above the day’s needs are auctioned to the Lynx participants as term deposits twice a day through the Bank’s auction system, and the government keeps a prudential liquidity reserve against a disruption of the markets; the Bank runs the auctions and holds the account as fiscal agent.
Government securities distributor: A dealer or bank allowed to bid at Government of Canada auctions; the primary dealers among them have bidding and market making obligations with the Bank of Canada.
Primary dealer (Canada): A government securities distributor with larger bidding limits at the Government of Canada auctions and market-making obligations in the secondary market, under the Bank of Canada’s terms as fiscal agent; the Canadian banks’ dealers and a few others; a foreign bank without a Canadian dealer cannot be one.
Inside the infrastructure: systems and documents
TMX Quantum: The TMX Quantum XA matching engine of the TSX, TSX Venture and TSX Alpha: the limit order book by price, broker and time, the opening call, the market on close, the market makers’ fills; the speed bump logic of Alpha runs on it.
SOLA: The Montréal Exchange’s own trading platform, which it also ran for the Boston Options Exchange it owned: the matching engine of the futures and options with the designated market makers’ quotes, open 20.5 hours a day since 2021 for the overnight session.
INET: Nasdaq’s matching engine, inherited from the Instinet and Island ECNs acquired in 2005, with the OUCH order entry protocol and the sub-100-microsecond latency; licensed to other exchanges as Nasdaq’s technology.
Cboe platform: Cboe’s electronic trading platform (the former Bats technology) running its options and equity exchanges, with the complex order book and the auction mechanisms.
BoC auction: The Bank of Canada’s auction system through which the government securities distributors submit bids at Government of Canada bill and bond auctions, run by the Bank as the government’s fiscal agent.
Settlement price: The daily price per contract month the futures exchange computes at the close of its settlement window (the volume-weighted average, the book midpoint or the spread relationships) and the clearing house marks every position to for the variation margin.
Margin call: The clearing house’s demand to its members (and the members’ to their clients) for the initial margin on the new positions and the variation margin on the day’s moves, to be met by the morning deadline through the settlement banks.
Clearing portal: The clearing firm’s site for its introducing brokers: accounts, orders, cashiering, margin, reports, exception queues.
Default management: The clearing house’s process when a member fails: the declaration, the porting of the clients, the hedging of the house portfolio with the default management committee of member traders, the auction to the surviving members, the waterfall.
Auction: The clearing house’s sale of a defaulting member’s portfolio to the surviving members, who are obliged to bid; also the ISDA auction that sets the recovery price after a credit event and the settlement auctions of the exchanges.
Pay-in schedule: CLS’s notice to each settlement member, issued the evening before the value date, of the net amounts it must pay into CLS’s account at each central bank by the hourly deadlines of the settlement window.
ISO 20022: The international standard for the financial messages (the pacs.008 customer credit transfer, the pacs.009 bank transfer, the camt statements) with the structured data the old formats lacked, adopted by T2 in 2023, CHAPS in 2023, CHIPS in 2024 and Fedwire in 2025.
AFT: The automated funds transfer, the ACSS stream for the direct deposits (payroll, benefits, tax refunds) and the pre-authorized debits (bill payments, loan payments), the Canadian counterpart of the ACH, exchanged in files between the direct clearers and settled net at the Bank of Canada the next morning.
EFT: An electronic funds transfer through Canada’s retail payment system (the ACSS, with the Real-Time Rail to come): bill payments, pre-authorized debits and direct deposits between a client’s bank and the dealer.
ATON: CDS’s Account Transfer Online Notification service: the electronic transfer of a client’s account between dealers (and some banks and mutual fund dealers), with CIRO deadlines on the delivering dealer.
RTR: The Real-Time Rail, Payments Canada’s instant payment system launching with its first direct participants in the fourth quarter of 2026 under the by-law in effect since August 2026, with the e-Transfer migration in 2027; settlement in seconds in central bank money on the RTR settlement accounts at the Bank of Canada.
Trade capture: The front-office system where every trade is booked and positions, risk and P&L are kept, one per desk family in most banks (Murex MX.3, Calypso, Summit, Bloomberg TOMS, Fidessa, in-house).
Reporting hub: The engine that turns bookings into regulatory reports (TRACE, CAT, SDR, SBSDR, RTRS, FR 2052a) and tracks acknowledgments and rejects (DTCC Report Hub, AxiomSL, in-house).
Risk engine: Computes end-of-day and intraday sensitivities, VaR and stress results from the trade population and market data; in-house, or the risk module of the trade capture system.
SWIFT message types used in the diagrams
MT300: SWIFT confirmation of an FX trade.
MT305: SWIFT confirmation of an FX option.
MT320: SWIFT confirmation of a fixed-term loan or deposit.
MT950: SWIFT account statement from a correspondent bank.
camt.053: ISO 20022 end-of-day bank account statement, the successor to MT950.
MT535: SWIFT statement of securities holdings from a custodian.
MT541: SWIFT instruction to receive securities against payment.
MT543: SWIFT instruction to deliver securities against payment.
camt.057: ISO 20022 notice to the account holding bank or custodian to expect an incoming payment, the successor of the MT210.
MT900: SWIFT debit confirmation from a bank.
MT304: SWIFT advice of an FX trade from a manager to its custodian, so the custodian can settle it.
MT545: SWIFT confirmation from the custodian that securities were received against payment.
MT547: SWIFT confirmation from the custodian that securities were delivered against payment.
MT548: SWIFT settlement status from the custodian: pending, matched, failed, with the reason.
MT566: SWIFT corporate action confirmation: the cash or securities credited for an event.
MT540-543: SWIFT instructions to receive or deliver securities, with or without payment; used to move collateral.
MT515: SWIFT client confirmation of a securities trade.
MT527: SWIFT triparty collateral instruction.
MT600: SWIFT confirmation of a precious metals trade.
MT604: SWIFT precious metals transfer or allocation instruction.
MT670: SWIFT standing settlement instruction update: how a counterparty notifies its SSIs by authenticated message.
MT340: SWIFT confirmation of a forward rate agreement.
MT564: SWIFT corporate action notification from a custodian or depository: the event, the options and the deadline.
MT502: SWIFT order to buy or sell securities, sent by a client to its broker or manager.
MT509: SWIFT trade status message from a broker or custodian.
MT101: The SWIFT request for transfer a corporate sends its bank, or a bank sends another, to move funds from the customer’s account.
MT700: The SWIFT message by which a bank issues a documentary credit to the advising bank.
MT710: The SWIFT advice of a documentary credit issued by a third bank, sent by the advising bank onward.
MT742: The SWIFT reimbursement claim a paying or negotiating bank sends the reimbursing bank under a documentary credit.
MT754: The SWIFT advice of payment, acceptance or negotiation sent by the paying bank to the issuing bank under a documentary credit.
MT799: The SWIFT free-format message between banks, used for trade finance correspondence and bank-to-bank undertakings.
MT940: The SWIFT customer statement message a bank sends an account holder (or its other bank) with the day’s entries and balances.
MT540: The SWIFT instruction to receive securities free of payment, used for the stock loans and the collateral deliveries.
MT306: The Swift confirmation of the FX options the MT305 cannot describe: average rate (Asian) options and forwards, barriers, digitals and other exotic structures, with their averaging or observation dates.
MT380: The Swift FX order: an investment manager instructs its custodian to buy or sell a currency for a fund; the custodian confirms the execution with an MT381.
MT606: The Swift precious metal debit advice: the account keeper tells the account owner its metal account was debited, with the bar list when the metal moves into allocated bars.
MT607: The Swift precious metal credit advice: the account keeper tells the account owner its metal account was credited, in fine troy ounces.
MT608: The Swift statement of a metal account: the opening and closing balances in ounces and the movements of the period, or the bars held in an allocated account.
TSX: the Equities Day From the Opening Call to the Market on Close, the Market Makers, the OPR and the TMX IP
The Toronto Stock Exchange’s day: the pre-open book from 07:00 with the calculated opening price, the opening call at 09:30 with the market makers, continuous trading on the Quantum XA book by price, broker and time under the order protection rule with the routing across the marketplaces, the consolidated data through the TMX Information Processor and CIRO’s surveillance feed, the single-stock and market-wide circuit breakers coordinated with the US, the market on close at 16:00 where the index money trades and the official close is set, the locked-in trades to CDS for T+1, and the OSC’s recognition of an exchange CIRO polices.
Worked example, illustrative:owner TMX Group, listed on its own exchange since 2002; the demutualized Toronto Stock Exchange of 1861; the TSX, TSX Venture, TSX Alpha, the MX, CDS and CDCC in one grouphandles listing and trading of Canadian equities, ETFs and funds; 1,600 issuers; 400,000,000 shares a day on the TSX of 1,000,000,000 across the market, illustrativemembers the participating organizations (the CIRO dealers); the TSX market makers assigned by securitylinks the TMX IP for the consolidated data; CDS for the clearing and settlement; CIRO for the surveillance; the other marketplaces under the OPRoverseen by the OSC as the recognizing regulator; CIRO under UMIR for the tradingthe day 07:00 pre-open; 09:30 opening call; 15:50 MOC imbalance; 16:00 close; 16:15 to 17:00 extended session; the trades to CDS the same evening
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to9 steps, hover or click any of them
The TSX is a listing franchise with a closing price: the market on close is where the index money trades, the market makers guarantee the small fills, and broker preferencing lets a dealer meet itself in the book. Between the calls it is one marketplace among several under the order protection rule, its data runs through its own information processor, and the trades go to CDS at night.
The Canadian marketplaces: the TSX, TSX Venture and TSX Alpha (TMX Group), Cboe Canada with its four books and MATCHNow, Nasdaq Canada’s three books, the Canadian Securities Exchange for the junior listings, and the ATSs of Tradelogiq (Omega, Lynx ATS), Liquidnet and Instinet; the TMX books take about half of the volume, Nasdaq Canada and Cboe Canada most of the rest (illustrative); NI 21-101 and NI 23-101 bind them into one market with the order protection rule, the dark rules and the fee caps, and CIRO regulates the trading on all of them under UMIR.
The TSX market maker: a trader at a participating organization assigned a list of securities by the exchange, obliged to quote two-sided within a spread goal, to fill the odd lots and to guarantee the fills of the small retail orders up to the minimum guaranteed fill size at the best price; the Canadian counterpart of the DMM without the auction facilitation, and the reason the small orders get filled on the TSX rather than routed to a wholesaler, which the Canadian rules do not allow for the Canadian-listed securities.
Broker preferencing: a Canadian marketplace matches an incoming order against the resting orders of the same dealer at the best price before the others at that price, so that a dealer’s own clients meet each other ahead of the queue; a feature the US market does not have, which rewards the large dealers’ flow and is argued over at every market structure review.
The TMX Information Processor: NI 21-101 requires an information processor for the listed securities’ consolidated data and the CSA designated the TMX IP, which receives the orders and trades of every marketplace and publishes the Canadian best bid and offer and the consolidated trades; the marketplaces are reported to it, not the dealers; the CSA review the data fees under their methodology; CIRO is the information processor for the debt market.
TMX Group›TSX Venture and Alpha
TSX Venture and TSX Alpha: the Junior Listings and the Capital Pool Companies, the Speed Bump and the Inverted Fee
TMX’s two other equity marketplaces: a mining exploration company or a capital pool company listing on TSX Venture through a sponsoring dealer with the graduation to the TSX as the pipeline, the junior book trading on the same Quantum engine and rules as the senior exchange with the CSE competing for the listings, TSX Alpha’s randomized speed bump on the active orders with the undelayed post-only quotes and the inverted fee that attracts the retail flow, the matching against the surviving quotes, the post-trade through CDS, the TMX IP and CIRO, and the recognition by the BCSC and the ASC for TSX Venture and the OSC for Alpha.
Worked example, illustrative:owner TMX Group; TSX Venture from the Canadian Venture Exchange of 1999, acquired in 2001; Alpha acquired from the dealers in 2012 and redesigned in 2015handles the junior listings (1,600 issuers, the capital pool companies) and their trading; Alpha’s inverted book for the active flow; 200,000,000 and 100,000,000 shares a day, illustrativemembers the participating organizations of each exchange; the market makers; the HFT liquidity providers on Alphalinks the TMX IP for the data; CDS for the clearing; CIRO for the surveillance; the TSX for the graduations; the CSE as the competing junior venueoverseen by the BCSC and the ASC as lead regulators of TSX Venture, the OSC for Alpha; CIRO under UMIRthe day 09:30 to 16:00 on the same engine; the speed bump of one to three milliseconds on Alpha; the trades to CDS the same evening
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The junior exchange lists the world’s exploration companies on a lighter bar and feeds the senior one by graduation, while Alpha makes a market structure point in miniature: delay the takers, spare the makers, pay the retail flow a rebate. Both run on the TSX’s engine and both answer to CIRO.
The capital pool company: TSX Venture’s program lets a shell with no business list with seed capital and a small public offering, then find and complete a qualifying transaction within 24 months, after which it trades as an ordinary issuer; the Canadian way of taking a small business public through a shell, the counterpart of the US SPAC on a far smaller scale, with the exchange’s approval of the transaction as the gate.
The Canadian Securities Exchange: the CSE, a recognized exchange since 2004 (the former CNQ), lists the junior companies TSX Venture does not take or that prefer its lighter requirements (the cannabis issuers of 2018, the crypto miners, the US-domiciled small caps) and trades them on its own books; a few hundred listings and a few percent of the Canadian volume (illustrative); the competing junior venue, recognized by the OSC and the BCSC.
The speed bump: TSX Alpha’s 2015 redesign delays the active orders by a random one to three milliseconds and exempts the post-only orders above a minimum size, protecting the liquidity providers from being picked off by the fastest takers after a price move elsewhere; the CSA approved it as a recognized exchange with the condition that its quotes stay unprotected under the OPR; Cboe Canada’s NEO-N applies a speed bump to the latency-sensitive takers it identifies instead.
The inverted fee: on an inverted marketplace the active order earns a rebate and the passive order pays, the reverse of the maker-taker model; the retail brokers route their active orders there for the rebate (the Canadian retail flow stays on the marketplaces, since the dealers may not sell it to a wholesaler for Canadian-listed securities), and the market makers post for the queue position in front of that flow; TSX Alpha and Nasdaq CX2 are the inverted books of the Canadian market.
Montréal Exchange: the CORRA and Bond Futures, the Index Futures and the Options From the Match on SOLA to CDCC
The Montréal Exchange’s cycle: a bank treasury’s hedge in the three-month CORRA futures through its approved participant, the match on the SOLA platform open 20.5 hours a day with the designated market makers and the overnight session, the novation to CDCC on the match with the initial margin on the portfolio model paid through the settlement banks and CDSX, the settlement price at the close with the variation margin and the expiry mechanics (cash for the CRA and the SXF, delivery through CDS for the CGB, stock for the equity options), Term CORRA built from the CRA prices, and the AMF’s recognition of an exchange that regulates its own participants with the OSC beside.
Worked example, illustrative:owner TMX Group; the Montreal Stock Exchange of 1874, the derivatives exchange since the 1999 restructuring of the Canadian exchanges, merged with the TSX Group in 2008handles CORRA futures (CRA), Government of Canada bond futures (CGB, CGF, CGZ), the S&P/TSX 60 futures (SXF), equity, ETF, index and CDR options; 1,000,000 contracts a day, illustrativemembers the approved participants (the CIRO dealers, the foreign firms with the exemption); the designated market makers; the CDCC clearing members behind themlinks CDCC for the clearing; CDS for the deliveries and the collateral; CanDeal Benchmark Administration Services for Term CORRA; the Bank of Canada’s CORRAoverseen by the AMF (Québec) as the recognizing regulator of an exchange and a self-regulatory organization; the OSC for Ontario; CIRO for the dealersthe day 20:00 ET the previous evening to 16:30 ET; the settlement prices at the close; the margin by the morning deadline; the quarterly expiries
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The Montréal Exchange is where the Canadian yield curve trades in futures, with the CORRA future doing what the BAX did until CDOR died, and CDCC behind every contract in a vertical silo. Term CORRA is read off its prices, and the AMF recognizes it as an exchange that polices its own members.
The 1999 restructuring: the Canadian exchanges split the market by specialty in 1999 (the Toronto Stock Exchange for the senior equities, the Canadian Venture Exchange for the juniors, the Montreal Exchange for the derivatives) under a ten-year non-compete, and the MX built its franchise on the interest rate futures and the options with CDCC as its clearing house; the TSX Group and the MX merged into TMX Group in 2008, so the Canadian market has one derivatives exchange in one group with the senior exchange, the depository and the clearing houses.
The CORRA futures: the three-month CORRA future (CRA), listed in 2020, settles to the compounded CORRA over a reference quarter on the IMM dates, the Canadian counterpart of CME’s three-month SOFR future; the BAX, the bankers’ acceptance future of 1988 that was the Canadian money market’s benchmark contract, delisted after CDOR’s cessation in June 2024 and its open interest converted; the one-month CORRA future (COA) serves the front end.
Term CORRA: the forward-looking one- and three-month rates derived from the CRA futures by CanDeal Benchmark Administration Services, the administrator TMX and CanDeal set up for the purpose, published since September 2023 for the loans and the trade finance that cannot use a backward-looking compounded rate; the CSA and OSFI limit its use to the loans and the hedges of those loans, as the US limits Term SOFR.
NI 94-102: the CSA’s rule on customer clearing and the protection of customer collateral and positions, the Canadian counterpart of the CFTC’s segregation and LSOC rules, under which a clearing member holds its clients’ cleared derivatives collateral in segregated accounts at the clearing agency so that the positions can be ported in a default; the MX contracts and the cleared swaps fall under it.
CDCC: the Clearing House of the MX Contracts and the Government of Canada Repo, From Novation to the Waterfall
The Canadian Derivatives Clearing Corporation’s cycle: every Montréal Exchange contract novated on the match and allocated to the members’ accounts, the initial margin on the portfolio model and the clearing fund collected through the settlement banks and CDSX by the morning, the daily cycle of marks and variation margin with the exercises, the assignments and the deliveries through CDS, the fixed income service clearing the Government of Canada repo and cash trades with the Repo 2.0 program for cleared general collateral repo and sponsored access, the settlement through CDSX and the settlement banks on Lynx, a member default through the waterfall, and the oversight by the AMF, the OSC and the Bank of Canada of a systemically important clearing house.
Worked example, illustrative:owner TMX Group; the Canadian Derivatives Clearing Corporation founded with the Montreal options market in 1975, the MX’s clearing house since, in the group since 2008handles every MX futures contract and option; the Government of Canada repo and cash trades since 2012; 30,000,000 open positions, CAD 100,000,000,000 of repo a day, illustrativemembers the clearing members (the banks’ dealers, the foreign firms); the fixed income clearing members; the clients through the members under NI 94-102links the MX as the trade source; CDSX for the collateral and the deliveries; the settlement banks on Lynx for the cash; CCMS for the cleared GC repo to comeoverseen by the AMF (Québec) and the OSC as the recognizing regulators, with the BCSC; the Bank of Canada under the PCSA as a systemic systemthe cycle novation on the match; the margin by the morning deadline; the marks at the close; the repo netted by settlement date; the deliveries through CDSX
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to8 steps, hover or click any of them
CDCC is the Canadian OCC and FICC in one small house: every Montréal Exchange contract novates to it on the match, the repo market’s dealers net their Government of Canada trades through it, and it margins and settles through the same group’s depository. The buy side’s sponsored access is still on the roadmap, and the Canadian dollar swaps clear in London.
The fixed income CCP service: CDCC began clearing the repo and the cash buy-and-sell trades in Government of Canada securities in 2012 at the Bank of Canada’s urging after the 2008 crisis, netting the dealers’ obligations and guaranteeing them; the membership is the dealers and the banks, the buy side is not yet in, and the volumes are a fraction of the Canadian repo market; the Bank of Canada’s 2025 review of the repo market and the Repo 2.0 program (the cleared general collateral repo through CCMS, the cash providers’ membership, the sponsored and agent models) are the path to a cleared market like FICC’s.
CCMS: the Canadian Collateral Management Service, launched by TMX and Clearstream in 2024, is the domestic triparty platform on which a dealer’s collateral is allocated, valued and substituted inside CDS’s books against the cash lender’s money for the repo and the securities lending in Canadian collateral; the cleared general collateral repo of Repo 2.0 will settle on it, as the GCF repo settles on BNY’s platform in the US.
The PCSA designation: the Bank of Canada designated CDCC systemically important under the Payment Clearing and Settlement Act when it took on the fixed income service in 2012, which subjects it to the Bank’s risk management standards (the CPMI-IOSCO principles), its rule reviews and its annual oversight, beside the AMF’s and the OSC’s recognition; the Bank can provide liquidity to a designated clearing house in an emergency.
What CDCC does not clear: the Canadian dollar interest rate swaps subject to NI 94-101’s clearing mandate clear at LCH’s SwapClear in London and at CME, both recognized by the CSA and SwapClear designated by the Bank of Canada; CDCC’s swap clearing plans of the 2010s did not launch, so the Canadian swap market’s central counterparty is abroad; the Canadian dollar FX settles through CLS.
CDS: the Depository and the Equity Clearing House, CDSX, CNS, the Settlement Day and the Funds Through Lynx
CDS Clearing and Depository Services: the Canadian securities held in book entry under CDS & Co. on the replatformed CDSX, the marketplace trades arriving locked in for CNS beside the matched institutional trades and the trade-for-trade bonds, the continuous net settlement into one position per security per participant for T+1 backed by the participant fund, the settlement day’s book-entry deliveries under the caps set by the designated banks’ lines and the collateral, the end-of-day funds settlement through Lynx at the Bank of Canada, the entitlements, the corporate actions, ATON and the links to DTC, and the oversight by the OSC, the AMF, the BCSC and the Bank of Canada of a systemic system owned by TMX under the regulators’ conditions.
Worked example, illustrative:owner TMX Group since 2012 (the Maple transaction); the Canadian Depository for Securities founded by the banks and the dealers in 1970; CDSX since 2003, replatformed in 2025handles custody and settlement of Canadian equities, bonds and money market; the CNS clearing of the marketplace trades; CAD 6,000,000,000,000 in custody, 1,500,000 trades a day, illustrativemembers the participants (the dealers, the banks, the custodians, the Bank of Canada); the beneficial owners and the issuers behind themlinks the marketplaces as trade sources; the designated banks as extenders of credit; Lynx and the Bank of Canada for the funds; DTC and NSCC through the links; Clearstream for CCMSoverseen by the OSC as lead with the AMF and the BCSC; the Bank of Canada under the PCSA as a systemic systemthe cycle matching by the end of T; CNS overnight; the deliveries through the day in CDSX; the funds through Lynx at about 16:00 on T+1
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to8 steps, hover or click any of them
CDS is DTC and NSCC in one building and one system: it holds the securities, nets the marketplace trades and settles the deliveries by book entry through the day, with the banks guaranteeing their participants up to a cap and the funds settled once through Lynx at the close. TMX bought the utility in 2012 and the regulators wrote the conditions.
The Maple transaction: in 2012 a consortium of the Canadian banks, pension funds and dealers (Maple Group) acquired TMX Group and folded CDS and Alpha into it, so that the exchange, the derivatives exchange, the depository and the two clearing houses came under one listed company; the OSC and the AMF approved it with recognition orders that cap the fee increases at CDS, require independent directors and participant committees, and keep the clearing open to every marketplace.
The extenders of credit: a CDS participant settles its end-of-day funds obligation through a designated bank that has agreed to extend it a line of credit and to guarantee its settlement, and the participant’s net debit cap in CDSX is set by that line and the collateral it holds; the large banks are their own designated banks; the model puts the banks behind the participants where DTC puts its own liquidity and net debit caps.
T+1 in Canada: the CSA moved the Canadian settlement cycle from T+2 to T+1 on May 27, 2024, one day ahead of the US because the Canadian market settles the interlisted stocks and the US securities through the links to DTC and could not be behind it; NI 24-101’s matching deadline moved to the end of the trade date; the money market and the Government of Canada bills were already on shorter cycles.
The Post Trade Modernization: CDS replaced its clearing, settlement, depository and entitlement systems in April 2025 with a platform built on TCS BaNCS for Market Infrastructure after several years of delay, keeping the CDSX name for the service; the same program carries the CCMS triparty service launched in 2024 and the risk model changes the Bank of Canada’s standards required.
Cboe Canada and Nasdaq Canada›Cboe Canada
Cboe Canada: the ETF and CDR Listings, NEO-L, NEO-N, NEO-D, MATCHNow and BIDS Canada
Cboe Canada’s marketplaces: an ETF or Canadian Depositary Receipt listing on the exchange that competes with the TSX for the funds, the NEO-L lit book with the auctions, the market makers and the priority to the natural investors, NEO-N’s speed bump on the latency-sensitive takers and NEO-D’s dark book under the CSA’s dark rules, MATCHNow’s dark pool and BIDS Canada’s conditional blocks, the post-trade through CDS, the TMX IP and CIRO shared with every marketplace, and the OSC’s recognition of an exchange and two ATSs under the CSA’s marketplace rules.
Worked example, illustrative:owner Cboe Global Markets; the NEO Exchange launched in 2015 by the Aequitas consortium, acquired in 2022 and renamed in 2023; MATCHNow acquired in 2020handles the ETF, CDR and fund listings (300); trading of every Canadian-listed security on four books, a dark pool and a block platform; 100,000,000 shares a day, about 14% of the market, illustrativemembers the CIRO dealers as members and subscribers; the market makers on NEO-L; the buy side on BIDS through its dealerslinks CDS for the clearing and settlement; the TMX IP for the consolidated data; CIRO for the surveillance; the other marketplaces under the OPRoverseen by the OSC as the recognizing regulator of the exchange and the ATSs; CIRO under UMIRthe day 09:30 opening auction; 09:30 to 16:00 continuous on the four books; 16:00 closing auction for its listings; the trades to CDS the same evening
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
Cboe Canada is the challenger that stayed: a listing exchange for the ETFs and the depositary receipts, four books that each take a position on speed and transparency, and the largest dark pool beside. It clears at CDS, consolidates into the TMX IP and answers to CIRO like every Canadian marketplace.
The Canadian Depositary Receipts: CIBC’s CDRs, listed on Cboe Canada since 2021, hold a US stock (or a European one since 2024) with a currency hedge into Canadian dollars and trade in Canadian dollars in small denominations, so a retail investor buys a fraction of a US share without the US dollar exposure; the receipts settle at CDS like any Canadian security and the underlying shares sit with the sponsor’s custodian; the MX lists options on them.
The dark rules: the CSA’s 2012 amendments to NI 23-101 require a dark order (one that is not displayed) to give meaningful price improvement over the Canadian best bid and offer unless it meets the minimum size, and give the displayed orders priority at the same price on the same marketplace; the rules kept the Canadian dark share low where the US off-exchange share passed 40%, and the dealers’ internalization without improvement is not allowed.
The speed bumps: TSX Alpha delays every active order by a random one to three milliseconds and spares the post-only orders above a size; NEO-N delays the active orders of the traders it classifies as latency sensitive by their order-to-trade behavior and spares the natural investors; both are the Canadian answer to the latency arbitrage against the market makers, approved by the CSA with the quotes of the delayed books kept unprotected under the OPR.
Cboe in Canada: the Chicago group owns Cboe Canada and MATCHNow and has no Canadian clearing house (its trades clear at CDS), no Canadian derivatives exchange (the MX is the only one) and no listing franchise beyond the ETFs and the CDRs; the group runs the Canadian venues on its global platform beside Cboe Europe, Cboe Australia and Cboe Japan.
Cboe Canada and Nasdaq Canada›Nasdaq Canada
Nasdaq Canada: CXC Lit, CX2 Inverted and CXD Dark, the Routing Under the OPR and the Flow the Wholesalers Do Not Get
Nasdaq Canada’s three books: a retail order routed by the dealer’s smart order router under the order protection rule and best execution across every marketplace, CXC’s lit maker-taker book on the INET engine with broker preferencing and the fee cap, CX2’s inverted book where the active retail flow earns the rebate the Canadian rules do not let the wholesalers pay for, CXD’s dark book at the midpoint under the dark rules, the post-trade through CDS, the TMX IP and CIRO, and the OSC’s recognition of an exchange in a market of three exchange groups, the CSE and the ATSs.
Worked example, illustrative:owner Nasdaq, Inc.; the Chi-X Canada ATS of 2008, acquired in 2016 and recognized as an exchangehandles trading of every Canadian-listed security on three books, no listings; 150,000,000 shares a day, about 18% of the market, illustrativemembers the CIRO dealers as subscribers; the electronic market makers and the HFT firms as the liquidity providerslinks CDS for the clearing and settlement; the TMX IP for the consolidated data; CIRO for the surveillance; the other marketplaces under the OPRoverseen by the OSC as the recognizing regulator; CIRO under UMIRthe day 09:30 to 16:00 on the three books, with the pre-open and the post-close sessions; the trades to CDS the same evening
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
Nasdaq Canada is a trading venue with no listings and three books, each a different deal for the dealer’s router: a lit maker-taker book, an inverted book that pays the retail flow a rebate, and a dark book at the midpoint. It is what competition for the order flow looks like in a market that does not allow payment for order flow.
The order protection rule in Canada: NI 23-101 requires every marketplace to prevent trade-throughs of the better-priced displayed orders on the other marketplaces (full depth of book, not just the top as in the US Reg NMS), with the marketplaces below a 2.5% share of the volume and the speed bump books unprotected since 2016; the dealers’ routers must therefore sweep the protected books, and the CSA cap the fees a protected marketplace may charge the active orders.
Payment for order flow: the Canadian rules do not allow a dealer to be paid for routing its clients’ orders in Canadian-listed securities to a wholesaler for execution off-marketplace, and UMIR’s order exposure rule sends the small client orders to a marketplace, so the retail flow that the US wholesalers execute internally trades on the Canadian lit and dark books; the inverted books’ rebates and the market makers’ guaranteed fills are what the retail dealers get instead.
The ATSs: an alternative trading system under NI 21-101 is a marketplace run by a registered investment dealer that is a CIRO member, with the marketplace obligations (fair access, the reporting to the TMX IP and CIRO, the systems requirements) but no listing and no rules of its own; MATCHNow, BIDS Canada, Tradelogiq’s Omega and Lynx ATS, Liquidnet Canada and Instinet’s Canadian crossing are the ATSs of the equity market, CanDeal and CBID those of the bond market.
The interlisted stocks: some 200 Canadian issuers (the banks, the energy and mining companies, the railways) are listed in Toronto and New York and trade in both, with the arbitrage between the two markets and the two currencies run by the dealers and the HFT firms; the Canadian marketplaces lose a share of their volume to the US venues, the settlement runs through the CDS link to DTC, and the Canadian halts and bands are coordinated with the US ones for these names.
CanDeal: the Dealer-to-Client RFQ for the Canadian Bonds and Money Market, the Data, Term CORRA and the Other Venues
The Canadian bond market’s platform: a pension fund’s request for quote on CAD 50,000,000 of the 10-year Government of Canada to four dealers on CanDeal, the dealers quoting in competition from their pricing engines and the interdealer market with the hit on the best price, the settlement trade for trade in CDSX on T+1 and the reporting to CIRO’s debt transaction reporting and information processor, CanDeal DNA’s evaluated prices and Term CORRA from the venture with TMX, the other venues (CBID for the advisors, Bloomberg and MarketAxess for the corporates, the interdealer brokers), and the OSC’s and CIRO’s regulation of an ATS in a market without an exchange.
Worked example, illustrative:owner the bank-owned dealers (RBC, TD, BMO, Scotia, CIBC, National) and TMX Group; CanDeal founded in 2001handles Government of Canada bonds and bills, provincial and corporate bonds, money market by RFQ; CAD 30,000,000,000 a day, illustrative; the evaluated prices; Term CORRAmembers the dealers as the liquidity providers; the institutional investors (pension funds, insurers, managers) as the clientslinks CDS for the settlement; CIRO for the debt reporting and the transparency; the MX’s CRA futures for Term CORRA; the Bank of Canada’s CORRAoverseen by the OSC as the principal regulator of an ATS; CIRO for the dealers and the marketplace; the Bank of Canada’s forums for the conventionsthe cycle RFQ and hit in seconds; confirmation on T; settlement in CDSX on T+1 (the money market same day); the reports to CIRO by T+1
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The Canadian bond market has six dealers and no exchange, so CanDeal is where the institutions make the six compete: a request for quote, a hit, a settlement at CDS. The platform the dealers own with TMX also prices the market every night and publishes the term rate the loans moved to after CDOR.
The Canadian bond market: the Government of Canada bonds and bills (CAD 1,500,000,000,000 outstanding, illustrative), the provincial bonds (the second largest segment, the provinces borrowing more than the federal government in many years), the corporate bonds, the money market; a dealer market dominated by the six bank-owned dealers with the foreign dealers at the margin, traded by voice and by RFQ, settled at CDS; the Bank of Canada’s Canadian Fixed-Income Forum sets the conventions, the CSA the transparency rules and CIRO the dealer rules.
CIRO’s debt reporting: since 2015 every dealer reports every debt trade to CIRO’s debt transaction reporting system (MTRS 2.0) by the next day, giving CIRO and the Bank of Canada a complete record of the market; the CSA designated CIRO the information processor for corporate debt in 2016 and for government debt later, with the post-trade publication delayed and the sizes capped so that the dealers’ positions are not exposed; the Canadian counterpart of TRACE, built by the regulator rather than by FINRA’s predecessor.
Term CORRA: the forward-looking one- and three-month rates derived from the CRA futures on the Montréal Exchange and published by CanDeal Benchmark Administration Services (TMX and CanDeal) since September 2023, under the CSA’s and OSFI’s limits on its use to the loans and their hedges; the Canadian counterpart of CME’s Term SOFR, built by the platform and the exchange rather than by the futures exchange alone.
The interdealer market: the dealers trade the Government of Canada bonds among themselves through the interdealer brokers (Shorcan, owned by TMX, the largest; the others) anonymously by voice and screen, which is where the benchmark prices form and the dealers lay off the positions the clients leave them; the IDB trades settle at CDS trade for trade or, for the dealers in CDCC’s fixed income service, netted through the clearing house.
The Government of Canada Auctions: the Fiscal Agent, the Primary Dealers, the Multiple-Price Allocation and the Settlement in CDSX
The federal debt’s issuance: the Debt Management Strategy and the Bank of Canada’s auction call as fiscal agent, the government securities distributors’ and the primary dealers’ bids through the Bank’s auction system by noon with their customers’ bids and the Bank’s own share, the multiple-price allocation published within minutes with the surveillance against a squeeze, the issue into CDS against payment to the Receiver General through Lynx with the coupons and maturities paid by the fiscal agent, the Receiver General’s cash auctioned back to the Lynx participants as term deposits, and the Minister’s borrowing authority with the Bank’s terms of participation.
Worked example, illustrative:owner the Government of Canada as issuer; the Bank of Canada as fiscal agent running the auctions under the Bank of Canada Acthandles the Government of Canada bills and bonds: CAD 500,000,000,000 of gross issuance a year in the biweekly bill and the quarterly bond auctions; the Receiver General term deposits, illustrativemembers the government securities distributors; the primary dealers (the six banks’ dealers and a few others) with the larger limits; the customers through them; the Bank of Canada for its own accountlinks CDS for the issue and the payments in book entry; Lynx for the proceeds to the Receiver General; CDCC and the repo market for the secondary financingoverseen by the Minister of Finance under the Borrowing Authority Act; the Bank as fiscal agent under its Terms of Participation; no CSA role in the primary marketthe cycle the call a week ahead; the bids by 12:00 ET (bills 10:30); the results within minutes; the issue in CDSX on the issue date; the Receiver General auctions twice a day
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APIInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The federal government borrows through the central bank: the Bank of Canada runs the auctions, allocates to the primary dealers at their own yields, issues the bonds into CDS against payment to the Receiver General and auctions the government’s cash back to the banks the same afternoon. The Treasury market’s plumbing in Canada is the fiscal agent’s.
The multiple-price auction: the Government of Canada’s bill and bond auctions allocate from the lowest yield bid upward with each winner paying the yield it bid (the discriminatory auction), where the US Treasury switched to the single-price auction in 1998 and the UK keeps the bid-price auction for the gilts; the choice trades the winner’s curse the bidders face against the revenue the issuer collects, and the Bank of Canada’s studies have kept the multiple price for the nominal bonds.
The primary dealers: a government securities distributor that meets the Bank of Canada’s bidding and market-making requirements in the auctions and the secondary market becomes a primary dealer with a larger bidding limit (set by its share of the auctions and the secondary market, capped at a quarter of an auction with its customers), the obligation to bid at every auction and the access to the Bank’s operations; the six banks’ dealers and a few foreign and independent dealers; a foreign bank without a Canadian dealer cannot be one.
The Receiver General: the federal government’s cash manager, whose balances at the Bank of Canada are the government’s operating account; the balances above the day’s needs are auctioned to the Lynx participants as term deposits twice a day so that the cash stays in the banking system and earns the market rate, and the government keeps a prudential liquidity reserve against a disruption of the markets; the Bank runs the auctions and holds the account as fiscal agent.
The Bank of Canada’s purchases: the Bank buys a share of the bills and bonds at the auctions for its balance sheet (a share it announces, set with the government), which it reduced to nothing during the quantitative tightening of 2022 to 2025 and resumed in 2025 as the settlement balances reached their steady state; the Bank’s holdings of CAD 250,000,000,000 (illustrative) are the asset side of the banks’ settlement balances.
The Canadian Dollar Swap: the Venues, LCH SwapClear’s CAD Service Under NI 94-101, OSFI’s E-22 and the Trade Repositories
A Canadian dollar swap’s infrastructure: a province swapping its bond to floating against CORRA by request for quote on Tradeweb or Bloomberg or by voice, the submission to LCH SwapClear’s Canadian dollar service in London under NI 94-101’s clearing mandate with the novation within seconds, the margin at LCH with the Government of Canada bonds through CDSX and OSFI’s Guideline E-22 for the uncleared swaps, the report to a designated trade repository under OSC Rule 91-507 and MI 96-101 on the CSA’s 2025 reporting rules, the oversight by the Bank of Canada through the Bank of England with the CSA and OSFI, and the cleared book’s compression, conventions and basis.
Worked example, illustrative:owner LCH Ltd (LSEG) in London for the clearing; Tradeweb, Bloomberg and the interdealer brokers for the venues; DTCC, CME and ICE for the repositories; nothing in Canada but the collateral and the benchmarkhandles CAD interest rate swaps, basis swaps and overnight index swaps on CORRA; CAD 50,000,000,000 a day, CAD 10,000,000,000,000 of cleared notional outstanding, illustrativemembers the six banks and the foreign dealers as swap dealers and LCH clearing members; the pension funds, the provinces, the insurers and the corporates as clientslinks the SEFs, MTFs and Markitwire as trade sources; CDSX and the custodians for the collateral; DDR, CME and ICE Trade Vault for the reports; CME’s CAD clearing as the alternativeoverseen by the Bank of Canada under the PCSA through the Bank of England; the CSA for the mandate and the reporting; OSFI for the banks and E-22the cycle execution by RFQ or voice; clearing within seconds; margin daily; the report by the end of T+1; compression in cycles
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Market dataInternal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The Canadian dollar swap trades on American screens and clears in London, with a Canadian rule saying it must, a Canadian guideline margining what is not cleared and a Canadian rule sending the report to New York. CDCC does not clear it, so the Bank of Canada designated a clearing house in another country and oversees it through the Bank of England.
NI 94-101: the CSA’s mandatory clearing rule of 2017 requires the interest rate swaps in CAD, USD, EUR and GBP (the fixed-to-floating, the basis, the overnight index swaps and the forward rate agreements within the maturities listed) to be cleared at a regulated clearing agency when both counterparties are clearing participants of such an agency or their affiliates, or local counterparties with a month-end gross notional above the threshold; LCH Ltd, CME and CDCC are the regulated clearing agencies, and the end users below the threshold trade bilaterally.
The trade reporting rules: Ontario’s OSC Rule 91-507 (with the Québec and Manitoba equivalents) and Multilateral Instrument 96-101 in the other provinces require every derivative with a local counterparty to be reported to a designated trade repository (DTCC Data Repository (U.S.), CME’s repository, ICE Trade Vault) by the reporting counterparty (the dealer where there is one), with the lifecycle, valuation and collateral data; the CSA’s amendments in force since July 25, 2025 adopted the UTI, the UPI and the critical data elements aligned with the CFTC’s rewrite, so that a swap is reported the same way in both countries.
Guideline E-22: OSFI’s margin requirements for non-centrally cleared derivatives, the Canadian implementation of the BCBS-IOSCO framework, in force from September 2016 with the initial margin phased in to September 2022 by the size of the counterparty’s book; the federally regulated banks and insurers exchange variation margin daily and post and collect initial margin in segregated accounts with the counterparties above the threshold; the CSA’s own margin rule was proposed and not adopted, so E-22 is the Canadian rule.
The designation of SwapClear: in April 2013 the Bank of Canada designated LCH’s SwapClear service as systemically important under the PCSA because of the Canadian banks’ reliance on it for their Canadian dollar swaps, the first foreign FMI it designated after CLS; the Bank oversees it through the cooperative arrangements with the Bank of England and the global college rather than directly, and reports on it in its annual oversight; the alternative of a domestic swap CCP at CDCC was studied and not pursued.
Lynx: the RTGS Day From 00:30, the Settlement Accounts at the Bank of Canada, the Liquidity-Saving Mechanism and the FMIs Settling Through It
Payments Canada’s real-time gross settlement system: a corporate wire ordered through the bank in ISO 20022, sent to Lynx through the urgent mechanism or the liquidity-saving mechanism against the settlement balance, the collateralized advances of the Standing Liquidity Facility and the offsets of the queue, settled on the Bank of Canada’s books final and irrevocable, the other infrastructures (CDS, CDCC, CLS, the ACSS) settling their cash through it, the end of the day with the expiring queue and the balances at the deposit rate, and Payments Canada as the operator with the Bank of Canada as settlement provider and overseer under the PCSA.
Worked example, illustrative:owner Payments Canada (the Canadian Payments Association, member-funded, under the Canadian Payments Act); Lynx since August 2021, replacing the LVTS of 1999handles Canadian dollar payments in central bank money, final on settlement; 55,000 a day worth CAD 400,000,000,000, illustrativemembers about 17 direct participants (the large banks, the Bank of Canada, CLS); the hundred other Payments Canada members and the foreign bank branches as indirect participants through themlinks CDS for the end-of-day funds settlement; CDCC through the settlement banks; CLS through its account at the Bank; the ACSS’s net settlement; the Receiver Generaloverseen by the Bank of Canada under the PCSA as a systemically important system; the Minister of Finance for the by-lawsthe day 00:30 ET open; the client payments to 18:00, the interbank payments to 18:30, the finalization to 19:00 ET; the queue expires at the close; ISO 20022 since March 2023
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to8 steps, hover or click any of them
Every Canadian dollar that matters ends its day as a book entry on a settlement account at the Bank of Canada, moved by Lynx and final when it moves. The banks run the system through their association, the central bank holds the accounts and the collateral, and the queue does what the LVTS’s netting used to do without the guarantee.
From the LVTS to Lynx: the Large Value Transfer System of 1999 settled net at the end of the day with the payments final in real time on the strength of the collateral the participants pledged and a guarantee from the Bank of Canada for the residual (the survivors-pay tranche); Lynx of 2021 settles gross in real time on the settlement accounts with no guarantee and no credit, with the liquidity-saving mechanism supplying the netting efficiency the LVTS had; the collateral at the Bank now backs the Standing Liquidity Facility advances instead.
The two mechanisms: the urgent payment mechanism settles a payment at once against the participant’s settlement balance, for the time-critical payments (the CLS pay-ins, the CDS settlement, the Bank’s operations); the liquidity-saving mechanism holds the payments in a queue and releases them when they can be offset against incoming payments bilaterally or in a multilateral batch, so that the day’s CAD 400,000,000,000 settles on a fraction in balances, the design T2, CHAPS and the other RTGS systems share.
The Standing Liquidity Facility: a Lynx participant draws intraday advances from the Bank of Canada against the collateral it has pledged (the Government of Canada and provincial securities, the NHA mortgage-backed securities, the covered bonds and the other assets on the Bank’s list, at haircuts) at no charge, repaid by the close or converted into an overnight advance at the bank rate; the collateral is valued each morning before the cycle; the facility is where the LVTS’s collateral went.
The membership: the Canadian Payments Act amendments of June 2024, in force since September 29, 2025, opened Payments Canada’s membership to the payment service providers registered with the Bank of Canada under the Retail Payment Activities Act, the credit union locals and the designated clearing houses, so that the fintechs can participate in the Real-Time Rail and, where the Bank gives them an account, settle directly; the Lynx direct participation remains the banks’, under the Bank’s settlement account policy.
Payments Canada›ACSS
ACSS: the Retail Streams, the Exchange Between the Direct Clearers and the Net Settlement at the Bank of Canada the Next Morning
Payments Canada’s retail system: the AFT credits and debits, the cheques, the bill payments and the debit purchases collected by the banks, exchanged bilaterally between the direct clearers by payment stream under the rules of each with the indirect clearers behind them, netted by the ACSS into one position per direct clearer under the collateralized risk model, settled on the settlement accounts at the Bank of Canada the next morning with the value backdated, the Interac e-Transfers and debit purchases and the government’s direct deposits settling through its streams, and Payments Canada’s rules with the Bank of Canada’s oversight of a prominent payment system.
Worked example, illustrative:owner Payments Canada; the ACSS since 1984, the successor of the manual clearings of the Canadian Bankers Associationhandles the retail batch payments: AFT credits and debits, cheques and images, bill payments, EDI, point-of-sale debit, ABM, the Interac items; 35,000,000 items a day worth CAD 40,000,000,000, illustrativemembers about a dozen direct clearers (the large banks, Desjardins, the centrals, the Bank of Canada); the hundred indirect clearers through themlinks the settlement accounts at the Bank of Canada; Interac for the e-Transfers and the debit; the Receiver General for the government’s payments; the Real-Time Rail to comeoverseen by the Bank of Canada under the PCSA as a prominent payment system since 2016; the Minister of Finance for the rulesthe cycle exchange by stream through the day and the night; the net positions at the end of the cycle; settlement at the Bank the next morning, backdated
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The ACSS is where the Canadian economy’s small payments meet: a dozen direct clearers exchange the cheques, the payroll files, the bill payments and the debit purchases by stream, and the Bank of Canada settles the net the next morning as if it had happened the day before. The collateral at the Bank covers the gap, and the instant payments are leaving for the Real-Time Rail.
The streams: the ACSS clears by payment stream, each with its own rules under Payments Canada’s rulebook: the paper items (the cheques, now exchanged as images under the 2014 image rule), the AFT credits and debits (the direct deposits and the pre-authorized debits, the Canadian counterpart of the ACH), the EDI payments, the point-of-sale and the ABM streams for the Interac debit network, the shared network items and the government items; the direct clearers exchange the items of each stream bilaterally and report the totals to the ACSS for the netting.
Direct and indirect clearers: a Payments Canada member that meets the volume threshold (a share of the national clearing volume) and the operational requirements may be a direct clearer, exchanging the items and settling on its own account at the Bank of Canada; the other members clear through a direct clearer under a clearing agreement and settle on its books; about a dozen direct clearers (the large banks, Desjardins, Central 1, the Bank of Canada for the government’s items) carry the hundred members.
Backdated settlement: the ACSS settles the net positions on the next business day with the value backdated to the exchange day, so the direct clearers’ settlement accounts and the customers’ value dates reflect the day the items were exchanged; the overnight exposure between the direct clearers is covered by the collateral pledged under the ACSS risk model (defaulter pays, with a survivors-pay residual); the model replaced the Bank’s implicit backing when the ACSS was designated prominent in 2016.
The Real-Time Rail: Payments Canada’s instant payment system, with the exchange, the clearing and the settlement of each payment in seconds in central bank money on the participants’ RTR settlement accounts at the Bank of Canada around the clock, on ISO 20022 with a centralized fraud service; the by-law and the rules in effect since August 24, 2026, the first direct participants planned for the fourth quarter of 2026, the expansion and the migration of the e-Transfers in 2027; the registered payment service providers eligible as members since 2025.
Payments Canada›Interac
Interac: e-Transfer and Interac Debit in Real Time for the Customer, Net Through the ACSS, and the Real-Time Rail
The bank-owned retail network: an e-Transfer sent from the bank’s app to an email address and routed by Interac to the recipient’s bank that credits it within seconds on the interbank credit the banks accept, the net settlement of the day’s transfers through the ACSS at the Bank of Canada the next morning, a debit card purchase authorized in real time on Interac’s debit network and settled through the ACSS’s point-of-sale stream, the Real-Time Rail launching with the settlement in central bank money in seconds and the migration of the e-Transfers, and the Bank of Canada’s oversight of a prominent system with the RPAA and the Department of Finance.
Worked example, illustrative:owner Interac Corp., owned by the banks, the credit union centrals and the other participants; the Interac Association of 1984 merged with Acxsys in 2018handles e-Transfer (1,500,000,000 a year worth CAD 500,000,000,000) and Interac Debit (7,000,000,000 transactions a year), illustrative; e-Transfer for Business; the international transfersmembers the banks, the credit unions and the registered payment service providers as participants; the acquirers for the merchants; the consumers and businesses behind themlinks the ACSS for the net settlement at the Bank of Canada; the Real-Time Rail for the migration; the card networks beside for the international debitoverseen by the Bank of Canada under the PCSA as a prominent system (e-Transfer since 2020); the Department of Finance; the RPAA for the PSPsthe cycle real time for the customer; the net settlement through the ACSS the next morning, backdated; the RTR in seconds, around the clock
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatElectronic platform, APISWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
Canada had instant payments before it had an instant payment system: Interac e-Transfer credits the recipient in seconds on the banks’ own credit and settles net through the ACSS the next morning. The Real-Time Rail moves the same transfers onto central bank money in seconds, a decade after the banks’ network made the case for it.
Interac e-Transfer: launched in 2003 as the Interac Email Money Transfer, the service lets a customer of any participating bank send money to an email address or a mobile number, with the recipient’s bank crediting on autodeposit or on the answer to a security question; the fraud and the mistaken transfers are the service’s standing problems (the notification scams, the autodeposit name matching), and the banks’ limits and the delays on the first transfers are the controls; the business version carries the invoice data in ISO 20022.
The deferred net settlement: the customer sees the e-Transfer arrive in seconds, but the sending bank pays the receiving bank through the ACSS the next morning, so the receiving bank extends an intraday credit to the sending bank that the ACSS’s collateral and the limits cover; a prominent system’s risk, not a systemic one, in the Bank of Canada’s classification; the Real-Time Rail replaces this with the settlement of each payment in central bank money before the recipient is credited.
The RPAA: the Retail Payment Activities Act of 2021 requires the non-bank payment service providers (the wallets, the money transfer companies, the processors) to register with the Bank of Canada (from November 2024) and to meet the operational risk and the safeguarding-of-funds requirements (from September 2025), under the Bank’s supervision; the registered providers became eligible for Payments Canada’s membership in September 2025, which opens the Real-Time Rail to them; the banks and the credit unions stay under their own regulators.
The card networks: Visa and Mastercard run the Canadian credit cards and the international debit on their own networks with the settlement through the issuers’ and acquirers’ banks, under the Department of Finance’s code of conduct and the interchange agreements of 2014 and 2023; they are payment systems outside the infrastructure this page follows, as in the US; Interac’s domestic debit keeps the point of sale on the Canadian network.
The Bank of Canada: the Settlement Balances and the Floor, the Operations, the Facilities, the Fiscal Agency and the PCSA Oversight
The central bank as the settlement layer: the Lynx participants’ settlement balances paid the deposit rate under the floor system that keeps CORRA at the target, the overnight and term repos and the securities repo operations with the primary dealers settled in CDSX against the settlement accounts, the Standing Liquidity Facility’s intraday advances against the pledged collateral with the term and emergency facilities beside, the fiscal agency for the auctions, the Receiver General’s balances and the government’s payments, the designation and oversight of the systemic and prominent systems under the PCSA, and the Bank of Canada Act with the Minister of Finance and the inflation target.
Worked example, illustrative:owner a Crown corporation under the Bank of Canada Act of 1934, its profits to the Receiver General; the Governor appointed with the Government’s approvalhandles the settlement accounts of the Lynx participants and the designated FMIs (CAD 60,000,000,000 of balances); the operations and the facilities; the auctions and the Receiver General; the oversight, illustrativemembers the Lynx participants with settlement accounts; the primary dealers for the operations; the designated FMIs with accounts (CDS, CLS); the government as the fiscal agent’s principallinks Lynx for every settlement; CDSX for the operations and the collateral; the ACSS for the government’s items; CLS and SwapClear through the cooperative oversightoverseen by the Minister of Finance under the Bank of Canada Act and the PCSA; Parliament; the inflation-control agreement renewed every five yearsthe cycle the collateral valued each morning; the operations announced in the morning; the deposit rate overnight; the auctions on their calendar; the oversight report annually
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The Bank of Canada runs no payment system, but every Canadian dollar settles on its books: the banks’ balances sit there at the floor, the collateral behind Lynx is pledged there, the government’s cash and auctions run through it, and the systems that could break the market are designated and watched from it. One balance sheet, four roles.
The floor system: since the pandemic’s quantitative easing the banks hold far more settlement balances than they need, so the Bank of Canada runs a floor system in which the deposit rate sets the bottom of the overnight market and the target rate is reached by the abundance of the balances rather than by the corridor it ran before 2020 (the target in the middle, the balances near zero); the January 2025 cut of the deposit rate to 5 basis points below the target was meant to push the banks to trade among themselves rather than deposit at the Bank; the quantitative tightening ended in 2025 with the balances at their steady state.
CORRA: the Canadian Overnight Repo Rate Average, published by the Bank of Canada each morning from the previous day’s overnight repo trades in Government of Canada securities reported through the trade data (the rate the Bank took over from Refinitiv in 2020 and reformed), the benchmark the derivatives, the floating rate notes and the loans moved to when CDOR ended in June 2024; the Bank’s target is for the overnight rate, and CORRA is the measure of whether the target holds.
The PCSA designations: the Payment Clearing and Settlement Act lets the Bank designate a clearing and settlement system as systemically important (Lynx and its predecessor the LVTS, CDSX, CDCC, CLS Bank in 2002 as the first foreign system, LCH’s SwapClear in 2013) or, since the 2014 amendments, as prominent for the payment system risk it carries (the ACSS in 2016, Interac e-Transfer in 2020); the Bank sets the standards (the CPMI-IOSCO principles), reviews the rules, can issue directives and reports annually; the designations need the Minister of Finance’s agreement.
The fiscal agent: the Bank of Canada Act makes the Bank the government’s fiscal agent, so the Bank runs the auctions of the bills and bonds through its own system, holds the government’s securities in its CDS accounts, pays the coupons and the maturities, holds the Receiver General’s balances and auctions the excess, manages the Exchange Fund Account’s reserves and makes the government’s payments; the counterpart of the Fed’s fiscal agency for the Treasury, in a country where the central bank also runs the debt’s issuance machinery and the auction surveillance.
CLS for the Canadian Dollar: the Pay-Ins Through Lynx in the Night, Payment Versus Payment at the Bank of Canada and the Same-Day Session
The Canadian dollar in the FX settlement system: the USD/CAD trades submitted and matched on T by the Canadian settlement members for themselves and their third parties, the pay-in schedule from the netting of each member’s positions per currency, the pay-ins through Lynx to CLS’s settlement account at the Bank of Canada in the Canadian night with the dollars by Fedwire and the euros by T2, the settlement on CLS’s books payment versus payment across the central bank accounts with the pay-outs through Lynx by six in the morning, the same-day session for USD/CAD in the North American afternoon, and the Bank of Canada’s PCSA designation beside the Fed’s supervision and the Oversight Committee.
Worked example, illustrative:owner CLS Group Holdings, owned by the settlement member banks; CLS Bank International, an Edge corporation under the Fed, settling the Canadian dollar since the launch of 2002handles the Canadian dollar legs of the FX spot, forward and swap trades in CLS; USD 500,000,000,000 a day with a CAD leg, illustrative; the same-day USD/CAD sessionmembers the Canadian banks and the foreign settlement members settling Canadian dollars; the third parties (funds, corporates, smaller banks) through them; the Canadian banks as liquidity providers for the currencylinks Lynx and CLS’s settlement account at the Bank of Canada for the pay-ins and pay-outs; Fedwire, T2, CHAPS and the other RTGS systems for the other legsoverseen by the Bank of Canada under the PCSA since 2002; the Fed as primary supervisor; the CLS Oversight Committee of the 18 central banksthe day submission on T; the schedule the evening before; pay-ins through Lynx 01:00 to 06:00 ET; CLS’s account at the Bank back to zero by 06:00; the same-day session in the afternoon
BankThe infrastructureClientMarket participantsMarket infrastructuremessage or transferstanding flowexchanged and matchedoption, when needed1sequence, on the party that actsVoice, chatSWIFT messageInfrastructure system (payment, clearing, reporting)Internal systemOtherhover an arrow or a badge for the full detail
Jump to7 steps, hover or click any of them
The Canadian dollar settles its FX in the middle of the Canadian night: Lynx opens at half past midnight so the banks can pay their net Canadian dollars into CLS at the Bank of Canada while Europe is at work, and the dollars come back by breakfast, each leg against the other or not at all. The same-day session does it again in the afternoon for USD/CAD.
The Canadian dollar in CLS: one of the seven currencies CLS settled from its launch in September 2002 (with the US dollar, the euro, the yen, sterling, the Swiss franc and the Australian dollar), with the six Canadian banks as settlement members and the Bank of Canada holding CLS’s account; the Canadian dollar’s FX turnover is mostly against the US dollar and settles almost entirely in CLS, so the Herstatt risk the system was built against is gone for the currency’s main pairs.
Lynx at 00:30: the LVTS began opening at 00:30 ET in 2002 so that the Canadian members could make their CLS pay-ins in the European morning window, and Lynx kept the early opening; the Canadian banks’ treasuries run a night desk or an automated pay-in for it, funded from the settlement balances and the Standing Liquidity Facility; the same design question gave Fedwire its 21:00 ET opening.
The same-day session: CLS added a same-day settlement session in 2013 for the US dollar and the Canadian dollar, whose RTGS systems overlap through the North American day, so that the same-day FX trades (the T+0 spot, the funding swaps, the late trades) settle payment versus payment in the afternoon rather than bilaterally; the Mexican peso joined later; the session settles a small share of the volume and removes the risk of the trades that could not wait for the morning window.
The Bank of Canada and CLS: the designation of CLS Bank under the PCSA in 2002 was the first time the Bank designated a system outside Canada, on the ground that the Canadian banks’ FX settlement ran through it; the Bank oversees it through the CLS Oversight Committee the Fed chairs (the cooperative arrangement of the central banks of issue) rather than directly, holds the settlement account that makes the Canadian dollar a CLS currency, and reports on CLS in its annual oversight with the domestic systems.
1
→ next, ← previous, Esc exit. Click any step in the diagram to jump to it.