Financial market infrastructures

The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) jointly oversee designated settlement systems in New Zealand. Designation gives statutory backing for finality of settlement and netting through a designated settlement system. 

Designation and oversight of settlement systems transitioned to the Financial Market Infrastructures Act 2021 (FMI Act) from the Reserve Bank of New Zealand Act 1989 when the FMI Act became effective on 1 March 2024. 

The FMI Act establishes an enhanced regulatory regime for FMIs that brings New Zealand in line with our peer jurisdictions and reflects international best practice, providing functions and powers to the joint regulators with 3 main components: 

• a set of information gathering and investigative powers to support ongoing oversight and monitoring of all FMIs;
• the power to set regulatory requirements for designated FMIs, such as issuing standards, reviewing contingency plans, and overseeing system rules (including rules regarding netting and settlements); and
• a set of powers to manage systemically important FMIs that are facing distress (i.e. crisis management powers) 

Regulations 

The Financial Market Infrastructures Regulations 2023 came into force on 3 July 2023. These regulations support the implementation of the FMI Act. They: 

• slightly extend the standards making power in the FMI Act to enable a robust and efficient framework to regulate overseas FMIs.
• establish a cost recovery fee of $39,130 (GST exclusive) to process designation applications. 

Read the Cabinet paper and associated Regulatory Impact Statement for the regulations

Joint regulation 

For payment systems, the Reserve Bank is the sole regulator. For all other types of FMIs, the Reserve Bank and the FMA will act jointly as the regulator. 

Further information on how we work with the RBNZ can be found in our memorandum of understanding (MoU).  

Memorandum of understanding (MoU) [PDF 767KB]

A four-way MoU has also been established between the RBNZ, FMA, Reserve Bank of Australia, and Australian Securities and Investments Commission 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. 

Further information on designations and the process, obligations of an FMI once designated, and FMI’s we currently designate and monitor can be found in the next sections. 

The regulator employs a risk-based approach to supervision and monitoring of each FMI, therefore engagements will be different for each entity, to ensure the regulator can effectively monitor ongoing compliance with the requirements in the Act and the Standards that are applicable to each designated FMI.  

The operator of a designated FMI is required to periodically report information to the regulator, and regular engagements take place with each designated FMI, in undertaking monitoring activity. 

Under s4 of the FMI Act previously designated settlement systems were to be treated as designated, and each was issued FMI Act designation notices specific to the FMI. 

New designations may happen in two ways:  

• the joint regulators can determine that an FMI is systemically important and therefore must be designated
• an FMI can apply for designation status on their own accord to access certain legal protections around netting and settlement finality. 

Under the FMI Act the joint regulators recommend, to respective Ministers, new designations of FMIs not previously designated.  

We have released a Guidance Note on Designation under the FMI Act 2021, which explains the roles of the Reserve Bank and Financial Markets Authority, and the approach the two agencies take when FMIs are designated that can be found here. 

Download FMIA Guidance Oct 2024 - Designations [PDF 233KB]

Any FMI may be required to provide information to the regulator in response to a notice issued by the regulator under section 14 of the FMI Act, for the purpose of, or in connection with, its functions. 

Designated FMIs 

If an FMI is designated under the Act, there are a number of obligations an operator of an FMI must comply with as follows: 

FMI Standards 

The standards for designated FMIs were issued on 27 July 2023 and came into effect on 1 March 2024. 

The FMI standards impose requirements on operators of designated FMIs and set out requirements applying to designated FMIs with which their operators must ensure compliance.  

The 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), with some modifications to reflect the New Zealand legal and operating environment and that the FMI standards are secondary legislation.

View the standards and accompany guidance

Contingency plans

In accordance with sections 47-48 of the FMI Act, each operator of a designated FMI must ensure that FMI has contingency plans, and notify the regulator as soon as practicable, when activated. Contingency plans must be: 

• comprehensive, adequate, and credible, taking into account the type of FMI concerned and the activities carried out under it; and
• capable of being activated and implemented effectively when appropriate 

The regulator may also require changes to a designated FMI’s contingency plans as covered in sections 50-51. 

FMI rules 

In accordance with section 36 of the FMI Act, the operator of a designated FMI must publish a copy of the FMI’s rules (as amended by any rule change that comes into effect) on an Internet site maintained by, or on behalf of, the operator and is publicly available free of charge. 

This does not apply to an overseas FMI. 

Rule changes 

A designated FMI’s rules are valid and enforceable despite any enactment, instrument, trust, or other rule of law to the contrary. Settlements must not be (wholly or partly) reversed, repaid, recovered, or set aside despite any enactment, instrument, trust, or other rule of law to the contrary (s54-55). 

Changes, by an operator of an FMI, to an FMIs rules must be approved by the regulator in accordance with s39 of the FMI Act. The Regulator may also require changes to a designated FMI’s rules as covered in section 40.  

Any changes approved must be published on the regulator’s website under s46 of the FMI Act. Further information on any rules changes that have been approved for each individual FMI can be found in each FMI's section under “Currently designated FMIs”, or a full list is displayed within the "Approved rule changes" section of this webpage. 

At present, there are three designated settlement systems the FMA is jointly responsible for regulating. The designation notices and further information on these settlement systems can be found below. 

NZClear

NZClear is the securities settlement system and central securities depository for a broad range of fixed interest securities and equities that are issued in New Zealand. It is owned and operated by the RBNZ.  

NZClear was declared a designated settlement system by the Financial Market Infrastructures Act Designation Notice (NZClear) 2023 which came into force on 1 March 2024. This replaced the previous Reserve Bank of New Zealand (Designated Settlement System—NZClear) Order 2012. 

Rule changes 

In accordance with s46(3) of the FMI Act, rule changes for NZClear approved by the regulator are displayed below:

NZCDC 

New Zealand Clearing and Depository Corporation Limited (NZCDC) clears and settles all transactions that are conducted on the markets of the New Zealand stock exchange, NZX Limited (NZX).  

NZCDC was declared a designated settlement system by the Financial Market Infrastructures Act Designation Notice (NZCDC) 2024 which came into force on 1 March 2024. This replaced the Reserve Bank of New Zealand (Designated Settlement System – NZCDC) Order 2010. 

Rule changes 

In accordance with s46(3) of the FMI Act, rule changes for NZCDC approved by the regulator are displayed below: 

NZCDC Section 39(3) Notice of Approval of Rule Change – effective 17 January 2025 [PDF 121KB] 

ASXCF

ASX Clear (Futures) Pty Limited (ASXCF) is the Clearing House for all futures and options products traded on ASX 24. 

ASXCF was declared a designated settlement system by the Financial Market Infrastructures Act Designation Notice (ASXCF) 2023 which came into force on 1 March 2024. This replaced the Reserve Bank of New Zealand (Designated Settlement System – ASXCF) Order 2020 on 10 August 2020. 

Rule changes 

In accordance with s46(3) of the FMI Act, rule changes for ASXCF approved by the regulator are displayed below: 

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 changes are published below, along with the effective dates: 

NZCDC Section 39(3) Notice of Approval of Rule Change – effective 17 January 2025 [PDF 121KB]