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30 November 2009

Draft Policy: The Designation and Oversight of Designated Settlement Systems

Consultation Document

Introduction

On 18 November 2009 the Minister of Commerce announced the passing of a bill that extended the scope of the systems that can be designated to systems that clear and settle products (notably securities) as well as payments. The Reserve Bank of New Zealand Amendment Act 2009 creates a new Part 5C of the Reserve Bank of New Zealand Act 1989. Part 5C provides for the designation of settlement systems and gives statutory backing for finality of settlement and netting through a designated settlement system. Part 5C also makes the Securities Commission a joint regulator of designated settlement systems with the Reserve Bank.

Draft policy document

The Reserve Bank and the Securities Commission have prepared a draft policy document for public consultation entitled "The Designation and Oversight of Designated Settlement Systems" (DSS1) (see attachment). This document explains the roles and policies of the Reserve Bank and the Securities Commission in relation to the designation and oversight of designated settlement systems.

The Reserve Bank and the Securities Commission are calling for submissions on the draft policy document. Please forward your submission to either of the following:

Submissions close on Friday, 22 January 2010.

Submissions will be subject to the Official Information Act 1982. The joint regulators may also make submissions available on their respective websites, or draw attention to submissions in any further reports. If you would like the joint regulators to withhold any commercially sensitive, confidential or proprietary information included in your submission please say so in your response. Any request to have information withheld will be considered in accordance with the Official Information Act.

Next steps

Once the submissions have been considered the Reserve Bank and the Securities Commission will finalise DSS1 and release it together with a separate document - Application Guidelines for Designation under Part 5C of the Reserve Bank of New Zealand Act 1989 (DSS2). The Reserve Bank and the Securities Commission will then accept applications from settlement systems seeking designation under Part 5C of the Reserve Bank of New Zealand Act 1989.

Attachment

Draft Policy: The Designation and Oversight of Designated Settlement Systems.