Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill

  • enacted
9 New section 239ABMA inserted (Enforcement of security interest over collateral for qualifying derivative)

After section 239ABM, insert:

239ABMA Enforcement of security interest over collateral for qualifying derivative

(1)

Nothing in sections 239ABC, 239ABD, 239ABE, and 239ABG limits or prevents any person referred to in subsection (2) from enforcing a security interest over collateral to the extent that the security interest secures payment or performance of an obligation under or in relation to a qualifying derivative if—

(a)

the counterparties to the derivative are—

(i)

2 qualifying counterparties; or

(ii)

a qualifying counterparty and an overseas person; and

(b)

before enforcement, the collateral is transferred or otherwise dealt with so as to be in the possession or under the control of—

(i)

the secured creditor; or

(ii)

another person (who is not the company that granted the security interest) on behalf of the secured creditor, under the terms of an arrangement evidenced in writing.

(2)

The persons are—

(a)

the secured creditor:

(b)

a receiver or person appointed as mentioned in paragraph (a), (b), or (d) of the definition of enforce in section 239ABK as that definition applies in relation to the security interest, or any of the security interests (even if appointed after the decision period).

(3)

Terms and expressions defined in section 122A of the Reserve Bank of New Zealand Act 1989 and used in subsection (1) have in that subsection the same meanings as in that section.

(4)

Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subsection (1)(b), and those modifications include—

(a)

treating references to section 122(9A)(ab) of that Act as references to subsection (1)(b) of this section; and

(b)

treating references to the enforcing counterparty as references to the secured creditor; and

(c)

treating references to the grantor as references to the company that granted the security interest.