Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill

  • enacted
20C Section 153 amended (Preferential claims)

(1)

After section 153(1)(a)(iii), insert:

(iv)

is not a security interest referred to in subsection (7); and

(2)

Replace section 153(2)(b) with:

(b)

secondly, to the payment of amounts secured by

(i)

any perfected purchase money security interest over the accounts receivable or inventory concerned, or any perfected security interest arising from a transfer of accounts receivable for new value over the accounts receivable concerned, to the extent that it has priority over the mortgagee’s mortgage and, in the case of the application of income, so far as payment is then due; or

(ii)

any security interest referred to in subsection (7) that is over the accounts receivable or inventory concerned:

(3)

After section 153(6), insert:

(7)

For the purposes of subsections (1)(a)(iv) and (2)(b)(ii), the security interest is a security interest over accounts receivable, inventory, or both to the extent that the security interest secures payment or performance of an obligation under or in relation to a qualifying derivative and

(a)

the counterparties to the derivative are

(i)

2 qualifying counterparties; or

(ii)

a qualifying counterparty and an overseas person; and

(b)

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

(i)

the enforcing counterparty; or

(ii)

another person (who is not the person who granted the security interest) on behalf of the enforcing counterparty, under the terms of an arrangement evidenced in writing.

(8)

Terms and expressions defined in section 122A of the Reserve Bank of New Zealand Act 1989 and used in subsection (7) have in that subsection the same meanings as in that section.

(9)

Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subsection (7)(b) (and those modifications include treating references to section 122(9A)(ab) of that Act as references to subsection (7)(b) of this section and treating references to the grantor as references to the person who granted the security interest).