Clearing Agreement for Canada

Clearing Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that establishes the relationship between a clearing member and its client for the provision of clearing services. The agreement details the terms and conditions under which the clearing member will clear and settle transactions for the client, including margin requirements, default procedures, risk management protocols, and operational requirements. It ensures compliance with Canadian federal and provincial regulations, particularly the Payment Clearing and Settlement Act and relevant securities legislation, while establishing the rights, obligations, and liabilities of both parties in the clearing relationship.

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What is a Clearing Agreement?

The Clearing Agreement serves as the foundational document establishing the legal and operational framework for clearing services in the Canadian financial markets. This contract type is essential when an investment firm, broker-dealer, or institutional investor (the client) requires access to clearing and settlement services through a clearing member, typically a bank or large financial institution. The agreement comprehensively addresses critical aspects such as margin requirements, default procedures, risk management, and regulatory compliance under Canadian federal and provincial laws. It becomes necessary when entities wish to participate in cleared markets but either cannot or choose not to become direct clearing members themselves. The document ensures alignment with Canadian regulatory requirements, including those set forth by provincial securities regulators and federal financial authorities.

What sections should be included in a Clearing Agreement?

1. Parties: Identification of the clearing member and the client

2. Background: Context of the agreement and the parties' intentions

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules of interpretation

4. Scope of Services: Description of clearing services provided and products covered

5. Membership Requirements: Requirements for maintaining clearing membership and client status

6. Client Obligations: Core obligations of the client including margin requirements and payment obligations

7. Clearing Member Obligations: Core obligations of the clearing member including execution of trades and maintenance of accounts

8. Margin Requirements: Detailed provisions regarding initial and variation margin requirements

9. Default Procedures: Events of default and consequences, including close-out procedures

10. Risk Management: Risk management procedures and requirements for both parties

11. Fees and Payments: Fee structure, payment terms, and related obligations

12. Representations and Warranties: Standard and specific representations and warranties from both parties

13. Confidentiality: Obligations regarding confidential information and data protection

14. Term and Termination: Duration of agreement and termination provisions

15. Governing Law and Jurisdiction: Choice of law and jurisdiction for dispute resolution

What sections are optional to include in a Clearing Agreement?

1. Give-Up Arrangements: Provisions for give-up trades, used when the client wishes to use executing brokers

2. Cross-Border Services: Additional provisions for clearing services in multiple jurisdictions

3. Indirect Clearing: Provisions for when the client provides clearing services to its own clients

4. Securities Lending: Terms for securities lending services if offered

5. Electronic Trading Services: Provisions regarding electronic trading platforms and systems

6. Insurance Requirements: Specific insurance requirements beyond standard coverage

7. Tax Matters: Specific tax-related provisions for complex clearing arrangements

What schedules should be included in a Clearing Agreement?

1. Schedule A - Eligible Products: List of products and asset classes covered by the clearing services

2. Schedule B - Fee Schedule: Detailed breakdown of all fees, charges, and commission rates

3. Schedule C - Operational Procedures: Detailed operational procedures and requirements

4. Schedule D - Risk Management Procedures: Specific risk management procedures and requirements

5. Schedule E - Contact Details: List of key contacts and authorized persons

6. Schedule F - Account Structure: Details of account structure and segregation arrangements

7. Appendix 1 - Required Documentation: List of required documentation and forms

8. Appendix 2 - Service Level Agreement: Detailed service levels and performance metrics

9. Appendix 3 - Technical Requirements: Technical specifications and system requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Service Agreement

Cost

Free to use
Clauses
Relevant Industries

Financial Services

Banking

Securities Trading

Investment Management

Brokerage Services

Asset Management

Hedge Funds

Insurance

Pension Funds

Commodities Trading

Relevant Teams

Legal

Compliance

Risk Management

Operations

Client Services

Trading

Settlement

Documentation

Treasury

Product Control

Regulatory Reporting

Client Onboarding

Relevant Roles

Chief Operating Officer

Head of Clearing

Compliance Officer

Risk Manager

Legal Counsel

Operations Director

Client Service Manager

Account Manager

Settlement Officer

Clearing Operations Manager

Chief Risk Officer

Head of Trading

Regulatory Reporting Officer

Treasury Manager

Product Controller

Documentation Specialist

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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