In May 2017 Cabinet agreed to a new legislative framework that will improve regulation of payment systems and other Financial Market Infrastructures (FMI).
The new framework builds upon the existing regulation of payment and settlement systems under Parts 5B and 5C of the Reserve Bank of New Zealand Act 1989, and will be jointly administered by the Reserve Bank and Financial Markets Authority in most respects. It also aims to ensure that regulation of FMIs is proportionate to the risks they pose.
The new oversight framework is divided into 2 parts.
- A set of regulatory powers that apply to designated FMIs — those that are systemically important, or who opt-in to designation in order to access the legal protections available under Part 5C of the Reserve Bank Act. The regulatory powers include the ability to set regulatory standards for designated FMIs, powers to oversee their rules, investigative and enforcement powers, and crisis management powers.
- Information gathering powers that would apply to all FMIs (including those which are not designated). This information gathering power will allow the broader functioning of the FMI sector to be monitored so that any FMIs that become systemically important in the future can be identified, as well as monitoring the build-up of systemic risks.