Our oversight of financial market infrastructures
We oversee financial market infrastructures (FMIs) in New Zealand, such as payment and settlement systems, to promote the maintenance of a sound and efficient financial system.
Legislative framework
In May 2021, the Financial Market Infrastructures Act (the FMI Act) was passed into law. The FMI Act establishes an enhanced regulatory framework for FMIs.
Read more about how FMIs fit within the financial system
Under the FMI Act, the Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) will be joint regulators of most FMIs, including central securities depositories, securities settlement systems, central counterparties and trade repositories. We will be the sole regulator of pure payment systems under the FMI Act.
See Schedule 3 of the Memorandum of Understanding (MoU) between us and the Financial Markets Authority formalising the relationship of cooperation.
MoU between the Financial Markets Authority and the Reserve Bank
A four-way Memorandum of Understanding (MoU) between the RBNZ, FMA, Reserve Bank of Australia, and Australian Securities and Investments Commission, has been established to formalise the mutually agreed framework for the cooperative supervision and regulation of New Zealand designated FMIs, which are operating in New Zealand but domiciled in Australia.
The FMI Act provides the regulators with comprehensive regulatory, supervisory, enforcement and crisis management powers in respect of important FMIs.
The FMI Act will replace the current regime, which is contained in Parts 5B and 5C of the Reserve Bank of New Zealand Act 1989.
Read the Financial Market Infrastructures Act
Read about how we developed the new FMI regulatory framework
Our oversight of FMIs
Our overall objective when administering the FMI Act is to encourage the efficiency and soundness of the financial system and reduce the damage that could arise from a failure of an FMI or other financial system distress.
We also aim to minimise the risk (or the perception) that either we or the government may be expected to bail out any financial institution that encounters difficulties.
Our aim is to promote the development of FMIs that:
- are efficient, open and flexible
- have a high level of integrity
- are robust in the face of financial crises.
Policies and approach
While we transition to the FMI Act, the Banking (Prudential Supervision) Act 1989 continues to specify our oversight powers for FMIs.
Additional policies, standards and conditions are specified in a policy document we issued in March 2015: Oversight of Financial Market Infrastructures in New Zealand. This policy document broadly adopts the CPMI-IOSCO Principles for Financial Market Infrastructures as a basis for FMI oversight.
Designation of FMIs
Designation gives statutory backing for finality of settlement and netting through a designated financial market infrastructure.
Before the FMI Act passed in May 2021, Part 5C of the Banking (Prudential Supervision) Act 1989 provided for the designation of settlement systems.
There are currently 5 designated settlement systems in New Zealand.
View the register of designated settlement systems in New Zealand
Please see below the Guidance Note on Designation under the FMI Act 2021. This explains the roles of the Reserve Bank and Financial Markets Authority, and the approach the two agencies take when FMIs are designated.
Publication of designation notices
Under the FMI Act, an FMI operator may apply to the regulator for designation, or the regulator may initiate designation of a systemically important FMI on its own initiative.
From 1 March 2024, the 5 FMIs which are currently designated under the Banking (Prudential Supervision) Act 1989 will require new designation notices issued under the FMI Act. We will publish the designation notices below.
Designation notices
Publication of section 39(3) notices of approval of rule change
Under section 39 of the FMI Act, an operator of a designated FMI may apply to the regulator for an approval of rule change. Under section 46 of the FMI Act, the regulator must publish the notice of approval of the rule change.
Notices of approval of rule change are published below.
Section 39(3) notices of approval of rule change
Relationships with other regulators
Our memberships
We are a member of a range of councils, groups, organisations and committees in New Zealand and overseas.
These memberships reflect shared interests and the benefits of cooperation for promoting effective and efficient financial sector regulation and supervision.
These memberships include the Executives' Meeting of East Asia-Pacific Central Banks (EMEAP) and the CLS Oversight Committee.
Read more about our memberships
More information
For information on current issues and recent developments relating to the New Zealand's financial market infrastructure, see the Financial Stability Report.