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.
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.
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.
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.
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:
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.
There are currently 5 designated settlement systems in New Zealand.
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.
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.
For information on current issues and recent developments relating to the New Zealand's financial market infrastructure, see the Financial Stability Report.