RBNZ and NZX to keep competing settlement systems

Monday 11th October 2010

The Reserve Bank of New Zealand and NZX have agreed to maintain separate, competing clearing and settlement systems after an extensive review of options.

The RBNZ and the exchange company have signed a memorandum of understanding on “full interoperability” between their two systems, they said in separate statements today.

The RBNZ operates NZClear, formerly known as Austraclear, which mainly settles over-the-counter transactions, and NZX runs NZ Clearing and Depository, which mainly settles exchange-based transactions.

They agreed to work together following a recommendation from the Capital Markets Development Taskforce to ensure an efficient clearing and settlement infrastructure that would support development of the nation’s capital markets.

Under the MOU, NZX will be eligible for back-up liquidity support from the central bank in its standard overnight facility. While the two parties will ensure seamless interoperability, each will make “their own independent decisions on how best to compete for clearing and settlements business” including price setting, the MOU says.

They also agreed to the establishment of an industry advisory council, which will include the NZX, RBNZ, brokers, custodians, banks and institutional investors and is to meet at least every six months. The council will give feedback and guidance on the operations of the two systems and the way they work together, the MOU says.

Businesswire.co.nz

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