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  3. Consultation: Proposed approach to implementing Financial Market Infrastructure Act

Consultation: Proposed approach to implementing Financial Market Infrastructure Act

Page last updated: 26 July 2021

Final date for submissions

20 September 2021

Consultation document

Reserve Bank and FMA consult on implementing new law to safeguard the ‘plumbing’ of the financial system

Response to submissions

Approach to Implementing the Financial Market Infrastructures Act 2021 (PDF 1MB)

Full submissions Approach to Implementing the Financial Market Infrastructures Act 2021 (PDF 1.2MB)
Resulting document

A Framework for Identifying Systemically Important Financial Market Infrastructures (PDF 967KB)

The Financial Market Infrastructures Act 2021 (the Act) establishes a comprehensive framework for the oversight and regulation of financial markets infrastructures (FMIs). The purposes of the Act include promoting the maintenance of a sound and efficient financial system and promoting and facilitating the development of fair, efficient and transparent financial markets. The Reserve Bank of New Zealand and Financial Markets Authority (together the Regulator) are working to implement the new regulatory regime established by the Act over an approximately 18-month period. We expect this to be completed towards the end of 2022.

The RBNZ and FMA are publishing an overview of the plan to implement the FMI Act and two consultation papers:

  • ’The FMI Act implementation plan’;
  • ‘A framework for identifying systematically important financial markets infrastructures’; and
  • ‘Approach to developing standards for financial market infrastructures.’

Update January 2022

The Reserve Bank of New Zealand – Te Pūtea Matua and the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko have released their finalised framework for assessing the systemic importance of Financial Market Infrastructures (FMIs) following consultation with industry and stakeholders.

FMIs are a set of critical systems that are sometimes referred to as the plumbing of the financial system which allow electronic payments and financial market transactions to occur. The Reserve Bank and the FMA are the joint regulator of FMIs under the Financial Market Infrastructure Act.

The systemic importance framework provides guidance on the factors that will be considered when determining whether an FMI is deemed of systemic importance, Deputy Governor and General Manager of Financial Stability Christian Hawkesby says.

“The finalised framework balances the need for flexibility in accounting for the specific circumstances of individual FMIs; and the importance of ensuring transparency in regulatory decision-making.”

FMA Acting Director of Capital Markets Paul Gregory says industry and stakeholder submissions were considered carefully and helped to improve the final framework.

“We appreciate the constructive feedback we received from stakeholders and have adjusted the regulatory approach to take this feedback into account. Changes include the treatment of critical service providers and discretion regarding the publication of material breaches.”

We have also published our responses to the feedback received on our proposed approach to developing standards for FMIs, including the incorporation of the internationally-recognised Principles for Financial Market Infrastructures into standards appropriate for New Zealand. We will next be consulting on an exposure draft of the standards.

Given the key role that FMIs play in the financial system, the disruption or failure of a systemically important FMI has the potential to cause significant adverse impacts on financial markets, businesses, and consumers, potentially threatening the stability of the financial system, Mr Hawkesby says.”