Hon Simon Power
Minister of Justice
18 November 2009
Media Statement
Legal protection for NZ settlement systems
Legislation providing legal backing for settlement systems – a key part of the infrastructure underpinning New Zealand's
financial markets – was passed by Parliament last night.
Settlement systems are used to transfer the ownership of an asset, such as shares, or commodities like oil.
The Settlement Systems, Futures, and Emissions Units Bill was split into four bills at the Committee stage: Reserve Bank
of New Zealand Amendment Bill, Securities Markets Amendment Bill, Personal Property Securities Amendment Bill, and
Securities Amendment Bill.
"It provides settlement systems with the option to apply for designation, which gives the system additional legal
protections in return for meeting regulated standards," Commerce Minister Simon Power said.
"Efficient clearing and settlement infrastructure is necessary for a financial system to perform well. These systems
support product innovation and risk management."
New Zealand has two settlement systems: Austraclear New Zealand, run by the Reserve Bank, and NZX's FASTER system. NZX
announced earlier this year that it intends to launch a new Central Counter Party clearing and settlement system, and
plans to seek designation for this system under the new legislation.
At present, New Zealand law only provides for the designation of payment systems, which are used to settle cash. Under
the new legislation, the designation regime will be extended to settlement systems more generally.
The legislation also makes minor changes aligning the regulatory environment for exchanges operating in both the
securities and futures markets, and supporting the development of the market for emissions units.
ENDS