Financial market infrastructures (FMIs) provide channels through which payments, securities, derivatives or other financia
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.
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:
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.
Chief Financial Officer
Financial Services Group
Reserve Bank of New Zealand
PO Box 2498
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.
Chief Operating Officer and Head of Risk
New Zealand Clearing and Depository Corporation Limited
Level 2, NZX Centre
11 Cable Street
PO Box 2959
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.
General manager, Enterprise compliance
ASX Operations Pty Ltd
20 Bridge Street
SYDNEY, NSW 2000
Telephone: +61 2 9227 0350
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:
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
Designation and Oversight of Designated Settlement Systems
This policy statement explains Part 5C of the Reserve Bank of New Zealand Act 1989 and the roles and policies of the Reserve Bank and the Financial Markets Authority in relation to the designation and oversight of designated settlement systems.