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Financial Markets bill receives third reading

29 August 2019

The Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill was given its third reading on 27 August. The Minister for Commerce and Consumer Affairs, Kris Faafoi, was in charge of the bill.

The omnibus bill seeks to amend several Acts to ensure that New Zealand financial market participants can continue to participate in international financial markets, by using derivatives to hedge risks, and to bring New Zealand law in line with recent financial market reforms in the European Union and G20 states.

Part 1 enables compliance with foreign margin rules for over-the-counter derivatives.

Subpart 1 amends the Reserve Bank of New Zealand Act 1989.

Clause 5 inserts new sections 122A (definitions of terms relating to qualifying derivatives) 122AB (Matters relating to possession or control of collateral) 122B (Bank may reduce or extend stay on exercise of rights to enforce security interest over collateral) 122C (Matters bank must be satisfied of under section 122B93)(b)) and 122D (Publication and status notice under section  122B).

Subpart 2 amends the Companies Act 1993.

Clause 9 inserts new section 239 AMBA (Enforcement of security interest over collateral for qualifying derivative.)

Subpart 3 amends the Corporations (Investigation and Management) Act 1989.

Subpart 4 amends the Personal Property Securities Act 1999. Clause 19 inserts new section 103B relating to priority of interests under qualifying derivatives.

Subpart 5 amends the Property Law Act 2007. Clause 20C amends section 153 (Preferential claims).

Subpart 6 amends the Receiverships Act 1993. Clause 20G amends section 30 (Preferential claims).

Part 2 establishes a new licensing regime for administrators of financial benchmarks and amends the Financial Markets Conduct Act 2013 (clause 21).

Part 1 comes into force on the day after the date of the Royal assent. The rest of the Act comes into force on a date appointed by the Governor-General by Order in Council.

Last updated on the 16th September 2019