This page gives an overview of the regulatory development of a new framework for financial market infrastructures, which we began in 2013.
In May 2021, the Financial Market Infrastructures Act 2021 (the FMI Act) was passed into law. The FMI Act establishes an enhanced regulatory framework for financial market infrastructures (FMIs).
Read more about the new FMI Act
On 26 July 2021, we announced our joint plans with the Financial Markets Authority (FMA) to implement the FMI Act over an approximately 18-month transition period. We invited stakeholders to provide feedback on key aspects of the new regulatory regime, such as how systemically important FMIs are identified and the approach to developing legally binding standards for designated FMIs.
Read the consultation on implementing the new regime for financial market infrastructures
Key features of the new framework include providing the regulators with:
A new Act was needed because the previous regime (as contained in Parts 5B and 5C of the Reserve Bank of New Zealand Act 1989) was considered insufficient to guard against market failures. These are failures that might have resulted in FMIs not putting enough focus on risk management or making inadequate investment into underlying infrastructure.
FMIs include electronic payment systems, and systems to settle trades in a range of financial products, such as equities and bonds. These systems are mostly used by banks and other financial institutions, but payment systems are also used by individuals, retailers and other businesses.
The new regulatory framework is consistent with international best practice.
The new legislative framework arose out of a detailed review of FMI regulation we began in 2013. This culminated in the passing of the Act in May 2021.
We are inviting feedback on the exposure drafts of the FMI Standards and Guidance, and a draft equivalence framework for overseas FMIs. The proposed FMI Standards and Guidance establish detailed requirements for FMIs that are designated under the FMI Act.
The exposure drafts of the FMI Standards and Guidance, and the draft equivalence framework, were developed in line with the approach we consulted on in 2021. This approach includes the translation of the Principles for Financial Market Infrastructures (PFMI) into standards appropriate for New Zealand.
Read the consultation on FMI standards
We have done further regulatory development to support implementation of the new framework. This involved a series of consultations.
The first of these joint consultations with the FMA opened in July 2021 and was on the approach to implementing the FMI Act. Stakeholders were invited to provide feedback on key aspects of the new regulatory regime such as how systemically important FMIs are identified and the approach to developing legally binding standards for designated FMIs.
Read the consultation on implementing the new regime for FMIs
In 2019, we consulted on an exposure draft for the new Bill setting out the enhanced regulatory framework in 2019.
We received 16 submissions from a range of stakeholders including domestic and overseas-based FMIs, law firms and industry associations. We have published the submissions (see below) except where the submitter sought confidentiality.
The feedback from stakeholders resulted in a number of technical drafting changes to the FMI Bill, which we have detailed in the summary of submissions.
In December 2018, Cabinet made a number of supplementary decisions on aspects of the proposed new oversight regime for FMIs. These decisions included that:
Cabinet agreed to adopt an enhanced legislative framework for the regulation of FMIs.
In 2016, we further consulted on new crisis management powers for systemically important FMIS (SIFMIs), as the final part of the proposed new regime. The proposed crisis management regime would have two parts:
In 2015, we consulted on changes to the proposed new regime to better support our risk-based supervisory approach. In particular, we proposed that:
Our March 2013 consultation proposed establishing a new legislative framework for the oversight of systemically important payment and settlement systems, which included:
The consultation paper also proposed that the new recognition regime be run parallel to the existing designation regime under Part 5C of the Reserve Bank of New Zealand Act 1989, under a similar co-regulatory arrangement with the FMA.