FMI Standard 18: Access and participation requirements

Introduction

Application

i. This standard applies to every operator of a designated FMI that was specified in its designation notice under section 29(2)(f) of the Financial Market Infrastructures Act 2021 (the Act) as falling within one or more of the following classes of designated FMIs:

(a) a pure payment system; or

(b) a central securities depository; or

(c) a securities settlement system; or

(d) a central counterparty.

Legal powers

ii. Under section 8 of the Act the regulator is defined as the RBNZ and the FMA acting jointly (or the RBNZ acting on its own in relation to pure payment systems).

iii. Section 12 of the Act provides the regulator's functions. These include regulating designated FMIs, dealing with designated FMIs that are distressed, and other functions under the Act.

iv. Subject to certain statutory prerequisites, section 31 of the Act empowers the regulator to make standards for designated FMIs.

v. Section 34 sets out the matters that standards may deal with or otherwise relate to. Section 34(1)(c) provides that a standard may deal with, or otherwise relate, to how operators must provide access to services under designated FMIs, including how persons may become participants of designated FMIs. 

Interpretation

vi. Words and phrases used in this standard have the same meaning as in the Act. 

Commencement

vii. This standard comes into force on 1 March 2024.

Requirements

1) An operator must have objective, risk-based, and publicly disclosed criteria for participation in the FMI, which permit fair and open access to the FMI.

2) Further to the requirements in clause (1) an operator must:

a) allow fair and open access to the FMI’s services, including by direct and, where relevant, indirect participants and other FMIs; and

b) ensure that access requirements are:

i) based on reasonable risk-related participation requirements; and

ii) justified in terms of the safety and efficiency of the FMI and the markets that the FMI serves; and

iii) tailored to, and commensurate with, the FMI’s specific risks; and

iv) publicly disclosed; and

c) set requirements that have the least restrictive impact on access to the FMI that circumstances permit, subject to the maintenance of acceptable risk standards; and

d) monitor compliance with participation requirements for the FMI on an ongoing basis and have clearly defined and publicly disclosed procedures for facilitating the suspension and orderly exit of a participant that breaches, or no longer meets, the participation requirements.

See Guidance for Standard 18: ‘Access and Participation Requirements’, in Guidance for the FMI Standards (PDF, 925KB) for more detail.