Kiwi regulators consult with industry on payments

  • By Elizabeth Fry

New Zealand’s central bank and Financial Markets Authority are asking the finance industry for their views on how a new law governing financial market transactions and payments should be put into effect. 

The Financial Market Infrastructure Act became law in May and governs financial market infrastructures, a set of critical systems that are sometimes referred to as the plumbing of the financial system. These systems allow electronic payments and financial market transactions to occur. 

The Reserve Bank and Financial Markets Authority want industry groups and other stakeholders to give their views on how systemically important FMIs will be identified and the proposed approach to developing standards, with the release of consultation documents. 

To this end, they have published an overview of their plan to implement the new law and have issued two consultation papers on this.  

The RBNZ and the FMA are together the regulator of FMIs under the Act. The Act will be implemented over an approximately 18-month transitional period. 

“Well-managed FMIs support well-functioning financial markets and are vital to a sound and efficient financial system,” said Geoff Bascand, the RBNZ’s deputy governor. 

“It is also true, however, that problems or disruptions at an FMI could lead to severe adverse impacts to financial markets, the wider financial system, and the economy as a whole.  

“The enhanced regulatory framework established by the Act provides scrutiny of FMIs and powers for regulators to intervene if needed to avoid significant damage to the financial system from problems with an FMI, its operator, or its participants,” he said.  

The FMA’s director of capital markets, Sarah Vrede, said: “We are continuing to work closely with the Reserve Bank on the implementation of this legislation and are now in a position to provide more detail on our joint approach to the development of regulatory requirements.”  

The two regulators are publishing an overview of the plan to implement the FMI Act in addition to the two consultation papers which are on the RBNZ website. 

They are looking for industry feedback by 20 September 2021.