The standards will come into effect in March
The Reserve Bank of New Zealand and the Financial Markets Authority have published the standards for designated Financial Market Infrastructures (FMIs), which will come into effect from March 1 and support the implementation of the FMI Act.
FMIs are multilateral systems (such as payments systems and central counterparties) that are essential for the day-to-day operation of the financial system and economy, as they enable electronic payments and financial market transactions.
Christian Hawkesby (pictured above), RBNZ deputy governor, said FMIs play a crucial role in NZ’s financial system, but because banks and other financial firms provide the direct interface with customers, not many New Zealanders are aware of them.
“Most of us don’t think about the underlying infrastructures we rely on for daily economic life, but we can be severely impacted when something goes wrong,” Hawkesby said.
“If a designated FMI failed or encountered problems, electronic payments and financial market transactions could be severely disrupted. This, in turn, could have flow-on impacts for New Zealanders, our financial system, and the wider economy.”
The FMI Standards were issued following two public consultations, which were held in July 2021 and September 2022. Feedback was largely supportive of the approach to closely follow international practice, the Principles for Financial Market Infrastructures, and included useful technical suggestions, which have been reflected in the standards.
“The issuance of FMI Standards and completing work to fully implement the FMI Act will help ensure that financial market infrastructures remain robust and operate smoothly in the background,” Hawkesby said.
Clare Bolingford, FMA executive director for regulatory delivery, said the release of the FMI Standards was a significant milestone and the culmination of several years’ work with the sector.
“We thank everyone who contributed to the development of the standards which align with international best practice while reflecting the specific characteristics here in New Zealand,” Bolingford said.
The FMI Standards include 28 standards, which set out the requirements for operators of systemically important FMIs and operators of FMIs who apply for designation status, plus detailed accompanying guidance and a framework for the regulation of overseas FMIs.
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