“designated settlement system has the meaning set out in section 156M”.

“operator, in relation to either a settlement system or a payment system, means any person that provides clearing, settlement, or processing services to participants in that system”.

“participant, in relation to either a settlement system or a payment system,—

• “(a) means a person who has agreed to participate in either a settlement system or a payment system in accordance with the rules of that system; and

• “(b) in the case of a designated settlement system, includes an operator of the settlement system if the designation under section 156N(3)(b) so provides”.

“settlement system has the meaning set out in section 156M

“specified operator has the meaning set out in section 156M”.

“Part  5C
“Designated settlement systems

“General

“156K Exercise of powers under this Part

• “(1) The powers conferred on the Minister and the Bank by this Part must be exercised for the purposes of—

  • “(a) promoting the maintenance of a sound and efficient financial system; and

  • “(b) avoiding significant damage to the financial system that could result from the failure of a participant in a settlement system.

  “(2) The powers conferred on the Minister responsible for the Securities Act 1978 and the Commission by this Part must be exercised for the purposes of—

  • “(a) promoting the integrity and effectiveness of securities markets and settlement systems in New Zealand; and

  • “(b) enhancing the confidence of investors and other market participants in securities markets and settlement systems in New Zealand.

  “(3) The Governor-General must exercise the powers conferred on him or her by this Part for the purposes set out in subsections (1) and (2).

“156L Commission may exercise powers under Securities Act 1978

• “(1) The Commission may exercise any of its powers under the Securities Act 1978 in performing its functions and duties, and exercising its powers, under this Act, and Part 3 of the Securities Act 1978 applies with all necessary modifications to its decisions and proceedings under this Act.

  “(2) However, for the purposes of this Part, the Commission may exercise its powers under sections 67 and 67A of the Securities Act 1978 in relation to the Bank only if, and to the extent that, the Bank is—

  • “(a) a participant in a settlement system; or

  • “(b) an operator of a settlement system.

“156M Definitions for this Part

• In this Part, unless the context otherwise requires,—

  “Commission means the Securities Commission established under Part 1 of the Securities Act 1978

  “contact person, in relation to a settlement system, means the person specified under section 156N(2)(d)

  “designated settlement system means a settlement system that is declared to be a designated settlement system under section 156N

  “insolvency means,—

  • “(a) in the case of a company or other body corporate,—

    • “(i) liquidation under Part 16 of the Companies Act 1993; or

    • “(ii) voluntary administration under Part 15A of the Companies Act 1993; or

    • “(iii) statutory management under Part 3 of the Corporations (Investigation and Management) Act 1989; or

    • “(iv) statutory management under Part 5 of this Act; or

    • “(v) liquidation, winding up, voluntary administration, statutory management, or other similar process under any other enactment or rule of law (whether of New Zealand or of another country); and

  • “(b) in the case of an individual,—

    • “(i) being adjudged a bankrupt under the Insolvency Act 2006 or any corresponding enactment (whether of New Zealand or of another country); or

    • “(ii) being admitted to the no asset procedure in subpart 4 of Part 5 of the Insolvency Act 2006 or other similar process under any other enactment or rule of law (whether of New Zealand or of another country)

  “joint regulators means—

  • “(a) the Bank; and

  • “(b) the Commission

  “Minister responsible for the Securities Act 1978 means the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for the administration of the Securities Act 1978

  “netted balance means any amount calculated under the netting provisions of the rules of a designated settlement system as the net debit payable by, or on behalf of, a participant in the designated settlement system to, or on behalf of, another participant in that system for all or any claims or obligations to which those rules apply

  “netting means the conversion into 1 net claim or obligation, or the set-off, of different claims or obligations between participants in a settlement system that results from the issue and receipt of settlement instructions involving 2 or more participants in the settlement system or that is otherwise provided for under the rules of the settlement system,—

  • “(a) whether on a bilateral or multilateral basis; and

  • “(b) whether or not through the interposition of an operator of the settlement system (whether by novation or otherwise); and

  • “(c) whether or not the obligations or claims constitute mutual credits, mutual debts, or other mutual dealings; and

  • “(d) whether or not the obligations or claims are denominated in New Zealand currency

  “property means personal property

  “pure payment system means a designated settlement system that is a payment system that is declared to be a pure payment system in accordance with section 156N(3)(d)

  “rules,—

  • “(a) in relation to a settlement system, means the rules of the settlement system (whether made under bylaws, agreements, procedures, contracts, or other documents) that are evidenced in writing and that provide, among other things, for—

    • “(i) the basis on which settlement instructions are given; and

    • “(ii) the basis on which settlement obligations are determined and calculated; and

    • “(iii) the basis on which settlements are effected (either on a gross basis or using netting); and

    • “(iv) any action to be taken if a participant in the settlement system is unable, or likely to become unable, to meet the participant's obligations to any or all of the following:

      • “(A) an operator of the settlement system:

      • “(B) another participant in the settlement system:

      • “(C) any other party to those rules; and

  • “(b) in relation to a designated settlement system, means the rules of that settlement system that are contained in documents specified in the designation under section 156N; and includes any amendments to those rules that have—

    • “(i) been notified, not been disallowed, and come into effect in accordance with the processes and the time frames set out in sections 156ZB and 156ZC; or

    • “(ii) been made pursuant to a variation of a designation under section 156ZD

  “settlement means—

  • “(a) the making of a payment or the transfer of the title to, or an interest in, property—

    • “(i) that is done in accordance with, or to give effect to, a settlement instruction; and

    • “(ii) that is on a gross basis or that uses netting; and

    • “(iii) whether by way of book entry on the accounts of a central bank or an operator of a settlement system or otherwise; or

  • “(b) any other act that discharges an obligation to make a payment or transfer the title to, or an interest in, property in accordance with the rules of a settlement system

  “settlement instruction means an instruction given to an operator of a settlement system—

  • “(a) that is made in accordance with the rules of that settlement system; and

  • “(b) that results, or is intended to result, in 1 or more settlements being effected

  “settlement system—

  • “(a) means a system or arrangement for effecting settlements or processing settlement instructions in accordance with rules; and

  • “(b) includes a payment system

  “specified operator means the operator of a settlement system specified in an Order in Council in accordance with section 156N(2)(c).

“Designation

“156N Designation of settlement system

• “(1) The Governor-General may, by Order in Council, on the advice of both the Minister and the Minister responsible for the Securities Act 1978 given in accordance with a joint recommendation of the joint regulators, declare any settlement system to be a designated settlement system.

  “(2) The order must specify—

  • “(a) the settlement system that is the subject of the designation; and

  • “(b) the documents that evidence the rules of that settlement system; and

  • “(c) which operator of the settlement system is the specified operator; and

  • “(d) the name or title of the person to whom notices relating to that settlement system must be given (the contact person).

  “(3) The order may also specify all or any of the following:

  • “(a) conditions to which the designation is subject:

  • “(b) that a particular operator is a participant in the settlement system that is the subject of the designation:

  • “(c) that the operator specified in accordance with subsection (2)(d) is an operator to whom section 103A of the Personal Property Securities Act 1999 applies:

  • “(d) that the settlement system that is the subject of the designation is a pure payment system.

  “(4) Both of the joint regulators must, as soon as practicable after a settlement system has been declared to be a designated settlement system, post on their respective Internet sites the contact details and the name or title of the contact person of that designated settlement system.

  “(5) However, the Commission does not have to comply with subsection (4) if a settlement system is specified to be a pure payment system in accordance with subsection (3)(d).

“156O Joint regulators' recommendations subject to procedure in sections 156Y to 156ZA

• The procedure set out in sections 156Y to 156ZA must be followed by the joint regulators when they make a recommendation under section 156N(1).

“Effect of designation

“156P Application of this Part to pure payment systems

• “(1) If a designated settlement system is specified to be a pure payment system in accordance with section 156N(3)(d), then this Part applies to that designated settlement system as follows:

  • “(a) for the purposes of sections 156K, 156M, and 156ZB to 156ZQ, the Bank is the sole regulator of that settlement system; and

  • “(b) all references to the joint regulators in sections 156K, 156M, and 156ZB to 156ZQ must be read as if they were references to the Bank; and

  • “(c) anything in sections 156K, 156M, and 156ZB to 156ZQ that may or must be done by both of the joint regulators may or must be done by the Bank alone; and

  • “(d) except as set out in subsection (2), in performing its functions and duties and exercising its powers under sections 156K, 156M, and 156ZB to 156ZQ, the Bank does not have to consult with, advise, or give notice to, the Commission; and

  • “(e) section 156L does not apply; and

  • “(f) the advice of the Minister responsible for the Securities Act 1978 is not required under section 156ZD or 156ZE; and

  • “(g) sections 156Q, 156R, and 156T apply only to the extent that they relate to the making of a payment; and

  • “(h) this Part must be interpreted with all necessary modifications in order to give effect to this section.

  “(2) However, if the Bank intends to recommend, in accordance with section 156ZD (applied as set out in subsection (1)), that a designated settlement system's designation is varied so that it is no longer specified to be a pure payment system, the Bank must consult with the Commission before making that recommendation.

  “(3) This section ceases to apply to a designated settlement system if, in accordance with section 156ZD (applied as set out in subsection (1)), that settlement system's designation is varied so that it is no longer specified to be a pure payment system.

“156Q Rules of designated settlement system are valid and enforceable

• “(1) The rules of a designated settlement system are valid and enforceable despite any enactment or rule of law to the contrary.

  “(2) However, subsection (1) applies only to the extent that the rules provide for—

  • “(a) the basis on which settlement instructions are given; and

  • “(b) the basis on which settlement obligations are determined and calculated; and

  • “(c) the basis on which settlements are effected (either on a gross basis or using netting); and

  • “(d) any action to be taken if a participant in the designated settlement system is unable, or likely to become unable, to meet the participant's obligations to any or all of the following:

    • “(i) the specified operator of the designated settlement system:

    • “(ii) another participant in the designated settlement system:

    • “(iii) any other party to those rules.

“156R Settlements must not be reversed, etc

• “(1) A settlement that is effected in accordance with the rules of a designated settlement system must not, whether in whole or in part, be reversed, repaid, recovered, or set aside despite any enactment or rule of law to the contrary.

  “(2) Subsection (1) extends to any application made to a New Zealand court by a foreign court, foreign representative, or foreign creditor to reverse, repay, recover, or set aside a settlement (whether in whole or in part) that relates to an insolvency that is within the jurisdiction of the relevant foreign court, foreign representative, or foreign creditor.

  “(3) In this section,—

  “foreign court means a judicial or other authority competent to control or supervise a foreign proceeding

  “foreign proceeding means a collective judicial or administrative proceeding in a foreign jurisdiction, including an interim proceeding, under a law relating to insolvency, in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation

  “foreign representative means a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor's assets or affairs or to act as a representative of the foreign proceeding.

  “Compare: 2006 No 57 Schedule 1 Article 2

“156S Limits on application of section 156R(1)

• “(1) Section 156R(1) does not apply to a settlement that is effected under the rules of a designated settlement system if—

  • “(a) a participant in the designated settlement system in respect of whom the settlement is effected becomes insolvent; and

  • “(b) the settlement is effected after the commencement of that insolvency.

  “(2) Despite subsection (1), section 156R(1) applies to the settlement if—

  • “(a) the settlement is effected within 24 hours of the commencement of the insolvency; and

  • “(b) the contact person can demonstrate that the contact person did not have notice of the commencement of the insolvency at the time that the settlement was effected.

  “(3) For the purposes of subsection (2), a contact person is taken to have notice of the commencement of an insolvency if—

  • “(a) the contact person fails to make any inquiries into the matter that a reasonable person would have made in the circumstances; or

  • “(b) the contact person fails to have regard to any public notice of the commencement of the insolvency that a reasonable person would have had regard to in the circumstances.

“156T Netting is valid and enforceable

• If the rules of a designated settlement system provide for netting, any netting under those rules is valid and enforceable despite any enactment or rule of law to the contrary.

“156U Certain provisions of Companies Act 1993 and Insolvency Act 2006 not to apply to netting 

• The following provisions do not apply to any netting under the rules of a designated settlement system:

  • “(a) sections 310A to 310O of the Companies Act 1993:

  • “(b) sections 255 to 262 of the Insolvency Act 2006.

“156V Limits on effect of sections 156Q, 156R, and 156T

• “(1) Nothing in section 156Q, 156R, or 156T prevents—

  • “(a) the operation of any enactment or rule of law in relation to an underlying transaction (including, without limitation, sections 56, 292, 297, and 298 of the Companies Act 1993 and section 194 of the Insolvency Act 2006); or 

  • “(b) any party from taking action against another party that has acted fraudulently or dishonestly so long as the remedy sought or obtained in respect of that action does not affect the application of section 156Q, 156R, or 156T.

  “(2) If a person brings an action under any enactment or rule of law in relation to an underlying transaction (including, without limitation, sections 56, 292, 297, and 298 of the Companies Act 1993 and section 194 of the Insolvency Act 2006), that person may produce evidence of a settlement before the court for the purpose of proving that—

  • “(a) a participant received value by means of that settlement; and

  • “(b) the value received was an element of the underlying transaction.

  “(3) In this section, underlying transaction—

  • “(a) means a transaction that gives rise to—

    • “(i) a settlement; or

    • “(ii) a settlement obligation; but

  • “(b) does not include—

    • “(i) a settlement instruction; or

    • “(ii) a settlement in accordance with the rules of a designated settlement system; or

    • “(iii) any novation of the obligations of a participant in a designated settlement system that is completed in accordance with the rules of that designated settlement system.

“156W Certain enactments prevail over sections 156Q, 156R, and 156T

• The following enactments prevail over sections 156Q, 156R, and 156T:

  • “(a) sections 122(8) and 127(4) of this Act:

  • “(b) sections 42(8) and 44(4) of the Corporations (Investigation and Management) Act 1989.

“156X Transfer of personal property by means of settlement in accordance with rules is effective

• “(1) Subsection (2) applies if—

  • “(a) personal property is transferred between 2 or more participants in a designated settlement system; and

  • “(b) that transfer is a settlement within the meaning of paragraph (a) of the definition of settlement in section 156M; and

  • “(c) that transfer is made in accordance with the rules of that designated settlement system.

  “(2) If this subsection applies, no person may refuse to take an action on the ground that the transfer was not effective.

  “(3) Nothing in this section affects any right a person has to refuse to take an action on any other ground.

“Procedure for making designation

“156Y Application for designation

• “(1) A person who wishes to have a settlement system declared to be a designated settlement system may apply to either of the joint regulators.

  “(2) A joint regulator must, as soon as practicable, advise the other joint regulator if it receives an application.

  “(3) An application must—

  • “(a) be accompanied by a copy of the rules of the settlement system and any information required by either or both of the joint regulators; and

  • “(b) set out the contact details and the name or title of the person who is proposed to act as the contact person of the settlement system; and

  • “(c) be accompanied by the application fee (if any) that is jointly determined by the joint regulators and approved by both the Minister and the Minister responsible for the Securities Act 1978 by notice in the Gazette.

  “(4) The joint regulators may, together, produce guidelines relating to the application procedure.

“156Z Consideration of application

• “(1) Both of the joint regulators must consider any application made in accordance with section 156Y.

  “(2) In considering an application, each of the joint regulators may have regard to any or all of the following matters:

  • “(a) the purpose and scope of the settlement system:

  • “(b) the rules of the settlement system:

  • “(c) any laws or regulatory requirements relating to the operation of the settlement system and the extent to which the settlement system complies with those laws or regulatory requirements:

  • “(d) relevant international standards concerning clearing and settlement systems, to the extent that they are relevant in the circumstances:

  • “(e) the capability and capacity of the operators of the settlement system:

  • “(f) the importance of the settlement system to the financial system:

  • “(g) any other matters that the regulator considers appropriate.

  “(3) In considering an application, each of the joint regulators must consider whether the settlement system should be specified to be a pure payment system.

  “(4) In considering an application, each of the joint regulators may have regard, or refer, to, and may rely upon, any relevant information, work, or matter held, or produced, by the other joint regulator.

“156ZA Decision on application

• “(1) After considering an application, the joint regulators must, together, either—

  • “(a) make a joint recommendation to both the Minister and the Minister responsible for the Securities Act 1978 that the settlement system to which the application relates be declared to be a designated settlement system under section 156N; or

  • “(b) refuse to make that recommendation.

  “(2) If subsection (1)(b) applies, the joint regulators must together give notice in writing to the applicant stating—

  • “(a) that the joint regulators refuse to make a recommendation that the settlement system to which the application relates be declared to be a designated settlement system under section 156N; and

  • “(b) the reasons for the joint regulators' refusal.

“Amendments to rules

“156ZB Joint regulators must be notified of proposed amendments to rules

• “(1) The specified operator of a designated settlement system must, as soon as practicable, notify either of the joint regulators of any amendment that is proposed to be made to the rules of that designated settlement system.

  “(2) A joint regulator must, as soon as practicable, advise the other joint regulator if it receives notice of a proposed amendment to the rules of a designated settlement system.

“156ZC Proposed amendments to rules may be disallowed

• “(1) The joint regulators may disallow any amendment that is proposed to be made to the rules of a designated settlement system by giving notice to that effect to the contact person of that designated settlement system on or before the day that is 40 working days after the date on which either of the joint regulators first received notice of the proposed amendment under section 156ZB(1) .

  “(2) If the joint regulators disallow a proposed amendment in accordance with subsection (1),—

  • “(a) the proposed amendment does not come into effect; and

  • “(b) the rules of the designated settlement system continue to apply as they did before the amendment was proposed.

  “(3) If the joint regulators do not disallow a proposed amendment in accordance with subsection (1), the proposed amendment comes into effect on—

  • “(a) the day that is 41 working days after the date on which either of the joint regulators first received notice of the proposed amendment under section 156ZB(1); or

  • “(b) any later date that is specified as part of the proposed amendment.

“Variation and revocation of designation

“156ZD Variation of designation

• The Governor-General may, by Order in Council, on the advice of both the Minister and the Minister responsible for the Securities Act 1978 given in accordance with a joint recommendation of the joint regulators, vary any designation made under section 156N—

  • “(a) by amending any of the matters referred to in section 156N(2)(b) to (d) and (3)(b) to (d); or

  • “(b) by making the designation subject to a requirement that an amendment be made to the documents that evidence the rules of the settlement system that is the subject of the designation; or

  • “(c) by revoking or amending any condition to which the designation is subject; or

  • “(d) by making the designation subject to a new condition.

“156ZE Revocation of designation

• The Governor-General may, by Order in Council, on the advice of both the Minister and the Minister responsible for the Securities Act 1978 given in accordance with a joint recommendation of the joint regulators, revoke any designation made under section 156N.

“156ZF Settlement and netting not affected by variation or revocation of designation

• The variation or revocation of a designation made under section 156N does not affect the application of sections 156Q, 156R, and 156T to settlements that were effected, and netting that took place, before the variation or revocation.

“156ZG Application for variation or revocation of designation

• “(1) A person who wishes to have the designation made under section 156N for a designated settlement system varied or revoked may apply to either of the joint regulators.

  “(2) A joint regulator must, as soon as practicable, advise the other joint regulator if it receives an application.

  “(3) An application must be accompanied by the application fee (if any) that is jointly determined by the joint regulators and approved by both the Minister and the Minister responsible for the Securities Act 1978 by notice in the Gazette.

“156ZH Either joint regulator may independently begin review of designation

• “(1) Either of the joint regulators may, independently of the other joint regulator and without having received an application under section 156ZG, begin a review to determine whether to recommend a variation or revocation of a designation made under section 156N.

  “(2) A joint regulator must, as soon as practicable, advise the other joint regulator if it begins a review to determine whether to recommend a variation or revocation of a designation made under section 156N.

  “(3) No fee can be charged if a joint regulator begins a review under subsection (1).

“156ZI Matters joint regulators may have regard to in recommending variation or revocation of designation

• “(1) In determining whether to make a recommendation that any designation made under section 156N be varied or revoked, each of the joint regulators may have regard to any or all of the following matters:

  • “(a) the purpose and scope of the designated settlement system:

  • “(b) the rules of the designated settlement system:

  • “(c) any laws or regulatory requirements relating to the operation of the designated settlement system and the extent to which the designated settlement system complies with those laws or regulatory requirements:

  • “(d) relevant international standards concerning clearing and settlement systems, to the extent that they are relevant in the circumstances:

  • “(e) the capability and capacity of the operators of the settlement system:

  • “(f) the importance of the designated settlement system to the financial system:

  • “(g) any failure to comply with any condition to which the designation is subject:

  • “(h) any failure to comply with the requirements of this Act:

  • “(i) any other matters that the joint regulator considers appropriate.

  “(2) In determining whether to make a recommendation that any designation made under section 156N be varied or revoked, each of the joint regulators may have regard, or refer, to, and may rely upon, any relevant information, work, or matter held, or produced, by the other joint regulator.

“156ZJ Procedure for variation or revocation of designation

• “(1) Before making a recommendation that any designation made under section 156N be varied or revoked, the joint regulators must together—

  • “(a) give the contact person notice of—

    • “(i) the reasons for proposing to vary or revoke the designation; and

    • “(ii) the fact that the contact person may make submissions to the joint regulators in relation to the proposed variation or revocation; and

  • “(b) give the contact person an opportunity to make those submissions within a time period that the joint regulators consider reasonable in the circumstances; and

  • “(c) consider any submissions made by the contact person during that time period.

  “(2) The notice referred to in subsection (1)(a) may be given either in writing or orally depending on the circumstances of the particular case.

“Obligations to give notice and supply information

“156ZK Contact person must be notified of insolvency

• “(1) This section applies if—

  • “(a) a participant in a designated settlement system (participant A) becomes insolvent:

  • “(b) any other participant whose settlements are effected by participant A through that designated settlement system becomes insolvent.

  “(2) If this section applies, participant A must, as soon as practicable after becoming aware of the insolvency, notify that fact to the contact person of that designated settlement system.

  “(3) It is sufficient compliance with the requirement to notify the contact person under subsection (2) if—

  • “(a) participant A takes all reasonable steps to comply with that requirement; or

  • “(b) the contact person was already aware of the commencement of the insolvency by the time participant A had to notify the contact person under that subsection.

“156ZL Supply of information relating to designated settlement system

• “(1) The joint regulators may, by notice in writing, require any or all of the following persons to supply the joint regulators with any information relating to any designated settlement system:

  • “(a) the specified operator of the designated settlement system:

  • “(b) a participant in the designated settlement system:

  • “(c) the contact person of the designated settlement system.

  “(2) The joint regulators may exercise the power conferred by subsection (1) only if the joint regulators consider that the information is reasonably required to enable them to perform their functions and duties, or exercise their powers, under this Part.

  “(3) A notice under subsection (1) may specify—

  • “(a) the periods for which, and the form in which, the information must be supplied; and

  • “(b) the manner in which the information must be verified.

  “(4) A person commits an offence if the person, without lawful justification or excuse, fails to supply information in accordance with this section.

  “(5) The penalty for an offence against this section is set out in section 156ZQ.

“Disclosure of information

“156ZM Disclosure of information between joint regulators

• “(1) No obligation as to secrecy or other restriction upon the disclosure of information, whether imposed by an enactment or otherwise, prevents the disclosure of information between either of the following persons:

  • “(a) the Bank; and

  • “(b) the Commission.

  “(2) Subsection (1) only applies to information—

  • “(a) obtained for the purposes of the administration of this Part, whether under sections 156Z(4), 156ZI(2), or 156ZL or otherwise; and

  • “(b) that is disclosed by the Bank or the Commission in order to enable them to perform their functions and duties, or exercise their powers, under this Part.

“156ZN Disclosure of information to third parties

• “(1) The joint regulators may publish or disclose any information or data supplied in accordance with section 156ZL only if—

  • “(a) the information or data is available to the public under any Act or is otherwise publicly available information; or

  • “(b) the information or data is in a statistical or summary form; or

  • “(c) the publication or disclosure of the information or data is for the purposes of, or in connection with, the exercise of powers conferred by this Act; or

  • “(d) the publication or disclosure of the information or data is to any central bank, authority, or body in any other country that performs functions and duties that correspond with, or are similar to, those conferred on the joint regulators under this Part, and the joint regulators are satisfied that the information or data will be used by that central bank, authority, or body for the purpose of performing those functions or duties; or

  • “(e) the publication or disclosure of the information or data is to any person who the joint regulators are satisfied has a proper interest in receiving the information; or

  • “(f) the publication or disclosure of the information or data is with the consent of the person to whom the information relates or of the person to whom the information is confidential.

  “(2) The joint regulators must not publish or disclose information or data under subsection (1)(d) or (e) unless the joint regulators are satisfied that satisfactory provision exists to protect the confidentiality of that information or data.

  “(3) An officer or employee of either of the joint regulators must not publish or disclose any information or data supplied in accordance with section 156ZL except for the purposes of, or in connection with, the exercise of powers conferred by this Act.

  “(4) An officer or employee of either of the joint regulators commits an offence if the officer or employee contravenes this section.

  “(5) The penalty for an offence against this section is set out in section 156ZQ.

“156ZO Limits on further disclosure of information

• “(1) A person to whom any information or data is published or disclosed must not publish, disclose, or use that information or data unless the publication, disclosure, or use is,—

  • “(a) in the case of a publication or disclosure under section 156ZN(1)(c),—

    • “(i) for the purposes of, or in connection with, the exercise of powers conferred by this Act; and

    • “(ii) in accordance with any conditions that may be imposed by the joint regulators:

  • “(b) in the case of a publication or disclosure under section 156ZN(1)(e),—

    • “(i) authorised by the joint regulators and in accordance with any conditions that may be imposed by the joint regulators; or

    • “(ii) necessary or desirable for the performance of any function or duty, or the exercise of any power, conferred by any enactment:

  • “(c) in the case of a publication or disclosure under section 156ZN(1)(f), in accordance with the terms and conditions (if any) of the consent referred to in that paragraph.

  “(2) A person commits an offence if the person contravenes this section.

  “(3) The penalty for an offence against this section is set out in section 156ZQ.

“156ZP Application of other enactments to information published or disclosed under section 156ZN

• Nothing in any Act, other than this Act or the Official Information Act 1982, requires the joint regulators or any person to whom information or data has been published or disclosed under section 156ZN to make that information or data available to any other person.

“Penalties for offences against this Part

“156ZQ Penalties for offences

• “(1) A person who commits an offence under any of the provisions listed in subsection (2) is liable, on summary conviction,—

  • “(a) in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $100,000; or

  • “(b) in the case of a body corporate, to a fine not exceeding $1,000,000.

  “(2) The provisions are—

  • “(a) section 156ZL (which relates to failing to supply information relating to a designated settlement system):

  • “(b) section 156ZN (which relates to disclosure of information supplied in accordance with section 156ZL to third parties):

  • “(c) section 156ZO (which relates to limits on further disclosure of information).”

• “(da) to keep under review the law and practices relating to settlement systems (as defined in Part 5C of the Reserve Bank of New Zealand Act 1989, but not including any designated settlement system that is declared to be a pure payment system in accordance with section 156N(3)(d)) and to perform the functions and duties, and exercise the powers, given to it under that Part; and”.

“Priority of interests of certain operators of designated settlement system

“103A Priority of interests of certain operators of designated settlement system

• “(1) The interest of an operator in personal property has priority over any security interest in the same personal property if a participant in a designated settlement system has, in accordance with the rules of that designated settlement system,—

  • “(a) either—

    • “(i) granted a security interest in that personal property in favour of the operator; or

    • “(ii) transferred that personal property, or the operator's interest in that personal property, to the operator; and

  • “(b) taken that action for the purpose of, or in connection with, either—

    • “(i) effecting a settlement in accordance with the rules of that designated settlement system; or

    • “(ii) mitigating a loss that may be incurred by the operator if the participant defaults.

  “(2) Subsection (3) applies if—

  • “(a) the interest of an operator in personal property has priority under subsection (1); and

  • “(b) that interest is a security interest; and

  • “(c) the relevant participant has defaulted.

  “(3) If this subsection applies, the operator—

  • “(a) does not have to comply with section 114(1) in respect of that personal property; and

  • “(b) may immediately apply the personal property, in accordance with the rules of the designated settlement system,—

    • “(i) to satisfy the participant's obligations in respect of which the participant is in default; or

    • “(ii) to mitigate any loss incurred by the operator as a result of the participant's default.

  “(4) Whether a loss has been incurred and whether a participant has defaulted, for the purposes of this section, must be determined by reference to, and in accordance with, the rules of the designated settlement system.

  “(5) In this section,—

  “operator means an operator of a designated settlement system who is (and at the time in question remains) specified under section 156N(3)(c) of the Reserve Bank of New Zealand Act 1989 as being an operator to whom this section applies

  “participant—

  • “(a) means a person who has agreed to participate in a settlement system in accordance with the rules of that system; and

  • “(b) includes an operator of a designated settlement system if the designation under section 156N(3)(b) of the Reserve Bank of New Zealand Act 1989 so provides

  “rules means the rules of a designated settlement system, as that term is defined in paragraph (b) of the definition of rules in section 156M of the Reserve Bank of New Zealand Act 1989.

  “(6) In this section, designated settlement system, participant, and settlement have the meanings given to them by section 2(1) or 156M of the Reserve Bank of New Zealand Act 1989.”

“business rules means the rules made by a registered exchange that govern the conduct of—

• “(a) business on any securities markets or futures markets operated by the registered exchange:

• “(b) persons authorised to undertake trading activities on any securities markets or futures markets operated by the registered exchange”.

“conduct rules means,—

• “(a) in relation to a securities market, the business rules and listing rules of a registered exchange in relation to the securities market; and

• “(b) in relation to a futures market, the business rules of a registered exchange in relation to the futures market”.

“futures market means a market, exchange, or other facility for trading in futures contracts”.

“registered exchange's securities market means a securities market operated by a registered exchange”.

“Part  2B
“Registered exchanges”.

• “(1) The Minister may, by notice in the Gazette, exempt a securities market, class of securities markets, futures market, or class of futures markets from any provision or provisions of this Part.”

“36F Registration of exchanges

• “(1) A body corporate may apply to become a registered exchange—

  • “(a) in respect of 1 or more securities markets; or

  • “(b) in respect of 1 or more securities markets and 1 or more futures markets.

  “(2) A body corporate may apply to become a registered exchange by delivering to the chief executive—

  • “(a) an application for registration in the form, and containing the information, required by the chief executive; and

  • “(b) a copy of the proposed conduct rules for the securities markets and (if applicable) futures markets to be operated by the body corporate; and

  • “(c) any fees required by regulations made under section 49D and evidence of payment to the Commission of the fees, charges, or costs required to be paid to it by those regulations.

  “(3) The chief executive must register the body corporate as a registered exchange, by entering the name of the body corporate in a register, after—

  • “(a) receipt of the documents and fees referred to in subsection (2); and

  • “(b) approval of the proposed conduct rules under section 36O.”

• “(2) Conduct rules for a futures market must include rules (business rules) that govern the conduct of—

  • “(a) business on that market; and

  • “(b) persons authorised to undertake trading activities on that market.”

• “(a) the Minister is satisfied that the proposal relates to a securities market or futures market that is not operated by the registered exchange under its existing conduct rules (a new market); and”.

• “(2) Before applying the approval process, the Minister must have regard to—

  • “(a) the integrity and effectiveness of securities markets, futures markets, or both (as the case may be) in New Zealand; and

  • “(b) the confidence of investors in securities markets, futures markets, or both (as the case may be) in New Zealand; and

  • “(c) the extent of the difference between existing markets operated by the registered exchange and the new market; and

  • “(d) the extent of the difference between the existing conduct rules and the proposed new conduct rules or changes.”

• “(a) direct a registered exchange to suspend trading of either or both of the following:

  • “(i) the securities, or a class of securities, of 1 or more public issuers:

  • “(ii) 1 or more futures contracts, or a class of futures contracts, traded on a futures market operated by the registered exchange; or”.

• “(a) the direction is necessary in the public interest to protect people trading in either or both of the following:

  • “(i) the securities, or a class of securities, of 1 or more public issuers:

  • “(ii) 1 or more futures contracts, or a class of futures contracts, traded on a futures market operated by the registered exchange; but”.

• “(1) A direction may be given under section 36ZO only if—

  • “(a) the Commission has given written notice to the registered exchange, and in the case of a direction to suspend the trading of securities or a class of securities, the public issuer or issuers concerned, of—

    • “(i) its opinion that the requirements of section 36ZP or 36ZQ are satisfied; and

    • “(ii) the proposed terms of the direction; and

    • “(iii) the reasons for its opinion; and

  • “(b) after receiving the Commission's notice, the registered exchange does not take, within the reasonable period stated in the notice,—

    • “(i) in the case of a proposed direction to suspend the trading of securities or a class of securities, action to prevent that trading; or

    • “(ii) in the case of a proposed direction to suspend the trading of futures contracts, or a class of futures contracts, action to prevent that trading; or

    • “(iii) in any other case, any other action that, in the Commission's view, is adequate to assess the situation raised in the notice; and

  • “(c) the Commission has had regard to any written submissions made to it by the registered exchange, and in the case of a direction to suspend the trading of securities or a class of securities, the public issuer or issuers concerned, within that notice period; and

  • “(d) the Commission still considers that it is appropriate to give the direction to the registered exchange.”

• “(ab) a body corporate that is a registered exchange in respect of securities markets and futures markets whose conduct rules for futures markets have effect under section 36I:”.

“emissions units means—

• “(a) units as defined in section 4(1) of the Climate Change Response Act 2002; and

• “(b) personal property that—

  • “(i) is created by, or in accordance with, any enactment (whether of New Zealand or of another country), rule of law, or contractual provision as—

    • “(A) one of a fixed number of units issued by reference to a specified amount of greenhouse gas; or

    • “(B) evidence of a specified amount of reductions, removals, avoidance, or sequestration of greenhouse gas emissions; and

  • “(ii) can be surrendered, retired, cancelled, or otherwise used to—

    • “(A) offset greenhouse gas emissions under any enactment (whether of New Zealand or of another country), rule of law, or contractual provision; or

    • “(B) enable a person who surrenders, retires, cancels, or otherwise uses it to claim an environmental benefit

“greenhouse gas has the meaning set out in section 31 of the Climate Change Response Act 2002”.

• “(1) No person may carry on the business of dealing in futures contracts unless that person—

  • “(a) is, or is a member of a class of persons that is, authorised by the Commission by notice in the Gazette to carry on the business of dealing in futures contracts; or

  • “(b) has been approved by an authorised futures exchange under its rules to carry on the business of dealing in futures contracts on the futures markets operated by the authorised futures exchange.”

• “(4) For the purposes of subsection (1)(b), rules, in relation to an authorised futures exchange within the meaning of paragraph (ab) of the definition of authorised futures exchange in section 37(1), means conduct rules.”

• “(1) Subject to subclause (2), an offeror must immediately send a written notice of any variation of the offeror's offer to—

  • “(a) every offeree; and

  • “(b) the target company; and

  • “(c) the Panel; and

  • “(d) the registered exchange (if any voting securities of the target company are quoted on the registered exchange's securities market).”

“emissions units means—

• “(a) units as defined in section 4(1) of the Climate Change Response Act 2002; and

• “(b) personal property that—

  • “(i) is created by, or in accordance with, any enactment (whether of New Zealand or of another country), rule of law, or contractual provision as—

    • “(A) one of a fixed number of units issued by reference to a specified amount of greenhouse gas; or

    • “(B) evidence of a specified amount of reductions, removals, avoidance, or sequestration of greenhouse gas emissions; and

  • “(ii) can be surrendered, retired, cancelled, or otherwise used to—

    • “(A) offset greenhouse gas emissions under any enactment (whether of New Zealand or of another country), rule of law, or contractual provision; or

    • “(B) enable a person who surrenders, retires, cancels, or otherwise uses it to claim an environmental benefit

“greenhouse gas has the meaning set out in section 31 of the Climate Change Response Act 2002”.

• “(a) means—

  • “(i) a writing (whether or not in the form of a security certificate) that is recognised in the place in which it is issued or dealt with as evidencing a futures contract, or a warrant or option or share, right to participate, or other interest in property or an enterprise, or that evidences an obligation of the issuer, and that, in the ordinary course of business, is transferred or withdrawn by—

    • “(A) delivery with any necessary endorsement, assignment, or registration in the records of the issuer or agent of the issuer, or by compliance with restrictions on transfer or withdrawal; or

    • “(B) an entry in the records of a clearing house or securities depository; or

    • “(C) an entry in the records maintained for that purpose by or on behalf of the issuer; or

    • “(D) an entry in the records maintained for that purpose by or on behalf of the nominee:

  • “(ii) emissions units; but”.

• “(1A) For the purposes of this Act, a person (person A) takes possession of an investment security that is an emissions unit if,—

  • “(a) in the case of an emissions unit that is evidenced by an emissions unit certificate, person A takes physical possession of that certificate:

  • “(b) in the case of an emissions unit that is, in the ordinary course of business, traded or settled through a clearing house or securities depository, the clearing house or securities depository, as the case may be, records the interest of person A in the emissions unit:

  • “(c) in the case of an emissions unit that is, in the ordinary course of business, held by a nominee, the records of the nominee record the interest of person A in the emissions unit:

  • “(d) in the case of an emissions unit that is a unit as defined in section 4(1) of the Climate Change Response Act 2002 and to which neither paragraph (b) nor (c) applies, the unit register established under section 18 of the Climate Change Response Act 2002 records person A as the possessor of the unit:

  • “(e) in the case of an emissions unit that is not a unit as defined in section 4(1) of the Climate Change Response Act 2002 and to which none of paragraphs (a), (b), or (c) apply, a person who is responsible for recording the holders of emissions units (whether by entry in a register or by any other means) records the interest of person A in the emissions unit.”

• “(4) For the purposes of subsection (1A)(a), emissions unit certificate does not include a printed search result, or a copy of a printed search result, that purports to be issued by a registrar.”

“emissions units means—

• “(a) units as defined in section 4(1) of the Climate Change Response Act 2002; and

• “(b) personal property that—

  • “(i) is created by, or in accordance with, any enactment (whether of New Zealand or of another country), rule of law, or contractual provision as—

    • “(A) one of a fixed number of units issued by reference to a specified amount of greenhouse gas; or

    • “(B) evidence of a specified amount of reductions, removals, avoidance, or sequestration of greenhouse gas emissions; and

  • “(ii) can be surrendered, retired, cancelled, or otherwise used to—

    • “(A) offset greenhouse gas emissions under any enactment (whether of New Zealand or of another country), rule of law, or contractual provision; or

    • “(B) enable a person who surrenders, retires, cancels, or otherwise uses it to claim an environmental benefit

“greenhouse gas has the meaning set out in section 31 of the Climate Change Response Act 2002”.