Contributed by: Ling Yan Pang and Audie Aurelia
Published on: September 29, 2022
Following the coming into force of the Financial Markets Infrastructures Act 2021 (FMI Act) in May 2021, the RBNZ and FMA are now consulting on the standards for designated financial market infrastructures (FMIs). In addition to exposure drafts of the FMI Standards, the RBNZ and FMA have also released related guidance and a draft equivalence framework for overseas FMIs, which can all be found here.
The FMI Standards will apply to operators of "designated" FMIs, being those that are assessed as either systemically important by the regulator ("called in"), or those that apply to be designated in order to benefit from the settlement finality provisions contained in the FMI Act ("opt in").
Together with the FMI Standards, the FMI Act provides a comprehensive regulatory regime for designated FMIs. The FMI Standards have been based on the Principles for Financial Market Infrastructures (PFMI) issued by the Committee on Payments and Market Infrastructure (CPMI) and the International Organization of Securities Commissions (IOSCO), although with differences to reflect the New Zealand legal and operating environment and that the FMI Standards are secondary legislation.
The FMI Standards covers, among other things, governance of designated FMIs, various risks including credit and liquidity risk, collateral (if required), an effective margin system and processes for settlement and deliveries.
Submissions are open until Friday, 18 November 2022 at 5pm. Please get in touch with one of our experts if you wish to discuss any aspect of the FMI Act, the FMI Standards consultation process or any other RBNZ or FMA consultations.
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