NZClear and applying to be a participant
Find out how the NZClear settlement system works and how to apply to be a participant.
NZClear is a real-time settlement system which participants access from their premises.
We operate NZClear in New Zealand to:
- enhance the confidence of investors in the integrity of the financial system, and in particular, the depository and electronic transfer system for securities
- promote greater efficiency and soundness in New Zealand financial markets by directly participating in those markets.
Membership of NZClear is presently restricted to entities involved in securities markets.
How it works
NZClear currently offers depository, wholesale registry and securities transfer.
We may add new services on request to fill unmet needs if those services are appropriate, contribute to the financial system's soundness and efficiency, and likely to be profitable.
Each NZClear participant has a security account(s) on the system which records the securities they lodge with New Zealand Central Securities Depository Limited (NZCSD). NZCSD is a custodian of the securities and fully owned by us.
NZCSD becomes the legal owner of the securities on the relevant register and holds securities on behalf of the participant, the beneficial owner.
Each participant must have an account provided by an Exchange System Settlement System (ESAS) account holder, usually a registered New Zealand bank. The bank providing the account has real-time access to set daylight limits on that account.
NZClear has electronic interfaces with both Computershare and Link. These allow securities to be lodged into and/or uplifted from NZClear electronically into the relevant securities registry.
NZClear also has an electronic interface with NZX. This allows NZX participants to electronically transfer securities via the NZClear depository (NZCSD) and NZCDC Ltd (NZX — New Zealand Stock Exchange — depository). This enables straight-through processing which in turn reduces operational risk and processing costs.
Applying to be a participant
We will consider an application to become a participant in NZClear from any institution (domestic or foreign) which we believe to be of good standing and with the necessary resources to meet its obligations as a participant.
All participants will generally be required to either:
- hold a certificate of exemption from resident withholding tax, or
- in the case of participants who are not resident in New Zealand for tax purposes, only be permitted to hold in NZClear fixed interest securities issued by either the New Zealand Government, local government funding authority or the Reserve Bank of New Zealand (with the issuer paying the approved issuer levy on non-resident withholding income).
Participation arrangements are set out in Clause 3 of the NZClear rules. The participant application process raises awareness of the risks a participant may pose to the NZClear system. An applicant must satisfy us it can meet its present and future obligations including in terms of its:
- operational capacity, including its ability and readiness to use the system and network we provide
- financial condition including capital and creditworthiness
- risk management expertise
- business continuity arrangements
- character and business integrity
- legal requirements including whether it holds all required licences and authorisations
- tax status (including holding of a certificate of exemption from resident withholding tax)
- any other considerations that, in the system operator's opinion, relate to the applicant's standing and the system's integrity.
Participants' rights and obligations to each other and our rights and obligations as the system operator are governed by NZClear rules.
How to apply
Email the NZClear HelpDesk to get a participants' application pack and we will be in touch.