Page last updated: 23 September 2022

Financial market infrastructures

Financial market infrastructures (FMIs) provide channels through which payments, securities, derivatives or other financial transactions are cleared, settled or recorded. Well-functioning and efficient FMIs play a critical role in promoting financial stability and economic growth. FMIs can strengthen the markets they serve; however, if not managed properly, they can pose significant risks to the financial system and be a potential conduit or source of contagion. A stable financial system therefore depends on careful management and mitigation of the key risks for FMIs.

Financial market infrastructures

FEATURED

Consultation: Proposed standards for Financial Market Infrastructure Act

The FMI Standards provide a comprehensive framework for the regulation of FMIs operating in New Zealand. Following consultation on the approach to developing the FMI Standards in the second half of 2021, the Reserve Bank of New Zealand and Financial Markets Authority (together the Regulator) have prepared exposure drafts of the FMI Standards, along with related guidance, and a draft equivalence framework for overseas FMIs.

The RBNZ and the FMA are inviting written feedback on these exposure drafts and related documents until 18 November 2022.

View the consultation

The Reserve Bank of New Zealand Act 1989 (RBNZ Act), Part 5C, provides for the designation of settlement systems. Designation gives statutory backing for finality of settlement and netting through a designated settlement system.

The Reserve Bank of New Zealand (RBNZ) and the FMA (the joint regulators) jointly oversee designated settlement systems in New Zealand in accordance with the RBNZ Act which details the FMA’s and RBNZ’s oversight powers and requirements for these systems with the FMA’s powers focusing on:

  1. promoting the integrity and effectiveness of settlement systems and related markets in New Zealand; and
  2. enhancing the confidence of investors and other market participants in settlement systems and related markets in New Zealand.

Further information can be found in our joint policy statement which explains the RBNZ Act, our roles and policies, and also in our memorandum of understanding (MoU) we have with the RBNZ. Currently, there are three designated settlement systems the FMA is jointly responsible for regulating. Information, in accordance with section 156N of the RBNZ Act can be found below.

NZClear is the securities settlement system and central securities depository for a broad range of fixed interest securities and equities that are issued in New Zealand. It is owned and operated by the RBNZ. NZClear was declared a designated settlement system by the Reserve Bank of New Zealand (Designated Settlement System – NZCDC) Order 2012 on 3 September 2012.

Contact:
Chief Financial Officer
Financial Services Group
Reserve Bank of New Zealand
PO Box 2498
WELLINGTON
Telephone (04) 472-2029
Email: [email protected]

New Zealand Clearing and Depository Corporation Limited (NZCDC) clears and settles all transactions that are conducted on the markets of the New Zealand stock exchange, NZX Limited (NZX). NZCDC was declared a designated settlement system by the Reserve Bank of New Zealand (Designated Settlement System – NZCDC) Order 2010 on 30 August 2010.

Contact:
Chief Operating Officer and Head of Risk
New Zealand Clearing and Depository Corporation Limited
Level 2, NZX Centre
11 Cable Street
PO Box 2959
WELLINGTON
Telephone: +64 4 495 2465
Email: [email protected]

ASX Clear (Futures) Pty Limited (ASXCF) is the Clearing House for all futures and options products traded on ASX 24 and was declared a designated settlement system by the Reserve Bank of New Zealand (Designated Settlement System – ASXCF) Order 2020 on 10 August 2020.

Contact:
General manager, Enterprise compliance
ASX Operations Pty Ltd
20 Bridge Street
SYDNEY, NSW 2000
Australia
Telephone: +6
1 2 9227 0350
Email: 
anatoly.kirievsky@asx.com.au

The Financial Market Infrastructures Act 2021 (FMI Act) became law on 10 May 2021.

The FMI Act establishes a new and enhanced regulatory regime for FMIs that brings New Zealand in line with our peer jurisdictions and reflects international best practice. Under the FMI Act the joint regulators recommend, to respective Ministers, designation of FMIs – this is different to current designations in place under the RBNZ Act. There are two ways that an FMI can become designated. First, the joint regulators can determine that an FMI is systemically important and therefore must be designated. Second, an FMI can apply for designation status on their own accord to access certain legal protections around netting and settlement finality.

For payment systems, the Reserve Bank is the sole regulator. For all other types of FMIs, the Reserve Bank and the FMA will act jointly as the regulator.

The FMI Act then provides functions and powers of the joint regulators with 3 main components:

  • a set of information gathering and investigative powers to support ongoing oversight and monitoring of all FMIs;
  • the power to set regulatory requirements for designated FMIs, such as issuing standards, reviewing contingency plans, and overseeing system rules (including rules regarding netting and settlements); and
  • a set of powers to manage systemically important FMIs that are facing distress (i.e. crisis management powers)

The joint regulators FMI Act implementation plan can be found here. For more information about how to apply to become a designated FMI and to view the latest proposals to update the supervisory regime for FMIs, please visit the RBNZ website

Latest

RBNZ and FMA seeking feedback on draft FMI Standards
RBNZ and FMA are inviting feedback on the exposure drafts of standards for financial market infrastructures (FMIs).
Consultation: Proposed standards for Financial Market Infrastructure Act
The FMI standards consultation from the RBNZ invites responses by 18 November 2022.
Reserve Bank and FMA finalise FMI regulatory framework
The Reserve Bank of New Zealand – Te Pūtea Matua and the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko have released their finalised