Published On: Mon, Oct 11th, 2010

NZX and RBNZ sign Clearing and Settlement MOU

NZX is very pleased to announce that it has signed a Memorandum of Understanding (the “MOU”) with the Reserve Bank of New Zealand (RBNZ) that cements the co-operative relationship between the two entities with regard to clearing and settlement in New Zealand.

The key terms of the MOU are:
* The RBNZ will, under its liquidity policy framework, treat NZX as a systemically important financial infrastructure, providing backup liquidity support to the Clearing House in the unlikely event it should be required;

* The RBNZ and NZX will deliver two technologically connected systems that will ensure seamless and efficient inter-operability for customers; and

* A joint industry advisory council is to be established to help create a unified approach to dealing with industry issues.

Mark Weldon, CEO of NZX, said, “The MOU is a vote of confidence by the Bank and NZX in a cooperative approach to clearing and settlement in New Zealand.

“We have been working with the Reserve Bank over an eight-month period, have focused on the details, and we are confident we have an outcome that is good for both institutions, and good for the efficiency, effectiveness and soundness of our markets,” said Weldon.

Pip Dunphy, Independent Chair of the Clearing House, said, “The NZX Clearing House Board is very pleased with the MOU, and the customer benefits and confidence it will bring to the Clearing House.”

The MOU relates to the RBNZ, NZX, NZClear (formerly Austraclear), the depository and settlement system of the RBNZ, and the New Zealand Clearing and Depository Corporation Limited (the “NZX Clearing House”).

The RBNZ announced on Friday 3 September that the NZX Clearing House had met the standards for a Designated Settlement System under Part 5C of the Reserve Bank of New Zealand Act

The RBNZ stated that, in making the decision to designate the NZX Clearing House, the regulators had “assess(ed), amongst other things, the clarity and legal certainty of the rules of a system, its financial soundness and risk management policies, and the capability and capacity of the operator”.

The NZX Clearing House went live on Monday 6 September. Dairy Futures launched on Friday 8 October, and will be cleared by the Clearing House.

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