Adequate Liquidity
19. (1) A liquidity pool is a fund established for the purpose of enabling its members to obtain sufficient cash or the equivalent to meet their commitments as they arise and to do so in a timely manner and at a reasonable cost. O. Reg. 76/95, s. 19 (1). (2) A liquidity pool must be administered in accordance with this section. O. Reg. 76/95, s. 19 (2). (3) Only credit unions are eligible to become members of a liquidity pool. O. Reg. 76/95, s. 19 (3). (4) A liquidity pool must be administered by a league, (a) that is a member of a group clearer that is part of the Canadian Payments Association; or (b) that has entered into a written agreement described in subsection (5) with a member of a group clearer, a group clearer or a direct clearer as defined in the by-laws of the Canadian Payments Association as published in The Canada Gazette. O. Reg. 76/95, s. 19 (4). (5) The agreement must provide the league with a line of credit in an amount not less than 2 per cent of the total of its members’ deposits, shares and earnings and must be revocable only after the member or clearer, as the case may be, has given the league at least 30 days prior notice. O. Reg. 76/95, s. 19 (5). (6) The liquidity pool must contain assets with a value at least equal to 5 per cent of the total value of deposits in each member and borrowings from each member by its own members. O. Reg. 76/95, s. 19 (6). (7) If the assets of the liquidity pool fall below the level specified in subsection (6), the league must notify the Superintendent of that fact and must give him or her a plan describing how the level will be restored. O. Reg. 76/95, s. 19 (7); O. Reg. 314/98, s. 9. (8) The assets of the liquidity pool must be invested in accordance with sections 17 and 18, subject to the following modifications: 1. For the purpose of paragraph 2 of subsection 16 (1), the deposits must be callable within one year after being issued. 2. For the purpose of paragraphs 2, 5 and 6 of subsection 17 (1), the instruments and deposits must mature within one year. 3. For the purposes of paragraphs 1 and 4 of subsection 18 (1), only 1 per cent of the credit union’s deposits and borrowings may be invested in instruments that have not less than an R1 Low or A rating as classified by the Dominion Bond Rating Service or not less than an A-1 or A rating as classified by the Canadian Bond Rating Service. O. Reg. 76/95, s. 19 (8). (9) A member of the liquidity pool is entitled, upon request, to receive a loan from the pool to maintain the member’s liquidity if the member meets the capital adequacy requirements or has received a variation under section 86 of the Act. O. Reg. 76/95, s. 19 (9). (10) The maximum amount of the loan to which a member is entitled is the amount deposited by the member in the pool. However, the league may lend the member an amount greater than that. O. Reg. 76/95, s. 19 (10). (11) A member is not entitled to withdraw deposits from the liquidity pool unless, (a) the member ceases to be a member of the pool; (b) the member is being dissolved; (c) the level of assets in the pool is greater than the minimum required by subsection (6); or (d) the pool is being dissolved. O. Reg. 76/95, s. 19 (11). (12) The assets of the liquidity pool must be set out in a readily identifiable manner in the league’s financial statements, separately from the league’s other assets. O. Reg. 76/95, s. 19 (12). (13) Despite subsection (4) a liquidity pool may be administered by Credit Union Central of British Columbia if Credit Union Central of British Columbia satisfies the requirements of clauses (4) (a) and (b) and this section applies, with necessary modifications, with respect to such a liquidity pool, subject to subsection (14). O. Reg. 298/07, s. 5. (14) For greater certainty, nothing in this section imposes any requirement on Credit Union Central of British Columbia but if a liquidity pool administered by Credit Union Central of British Columbia is not administered in accordance with this section the liquidity pool ceases to be a liquidity pool for the purposes of this Regulation. O. Reg. 298/07, s. 5.