Reserve Bank of New Zealand (Designated Settlement System—ASXCF) Order 2020

2020/207

Coat of Arms of New Zealand

Reserve Bank of New Zealand (Designated Settlement System—ASXCF) Order 2020

Patsy Reddy, Governor-General

Order in Council

At Wellington this 10th day of August 2020

Present:
Her Excellency the Governor-General in Council

This order is made under section 156N of the Reserve Bank of New Zealand Act 1989

(a)

on the advice and with the consent of the Executive Council; and

(b)

on the advice of the Minister of Finance and the Minister of Commerce and Consumer Affairs given in accordance with a joint recommendation of the Reserve Bank of New Zealand and the Financial Markets Authority.

Order

1 Title

This order is the Reserve Bank of New Zealand (Designated Settlement System—ASXCF) Order 2020.

2 Commencement

This order comes into force on 14 August 2020.

3 Interpretation

In this order, unless the context otherwise requires,—

ASX Clear (Futures) means ASX Clear (Futures) Pty Limited, a company incorporated in Australia

ASX Limited means ASX Limited, a company incorporated in Australia

ASXCF contact person has the meaning given to it in clause 7

ASXCF settlement system means the settlement system operated and managed by or on behalf of ASX Clear (Futures).

4 ASXCF settlement system declared to be designated settlement system

The ASXCF settlement system is declared to be a designated settlement system.

5 Documents that evidence rules of settlement system

The documents that evidence the rules of the ASXCF settlement system are the ASX Clear (Futures) Operating Rules, consisting of—

(a)

the Futures Operating Rules, but excluding the attachment entitled Procedures Determinations and Practice Notes; and

(b)

the OTC Rules; and

(c)

the ASX Recovery Rules; and

(d)

the ASX Enforcement and Appeals Rulebook.

6 Specified operator of settlement system

ASX Clear (Futures)—

(a)

is the specified operator of the ASXCF settlement system; and

(b)

is an operator to which section 103A of the Personal Property Securities Act 1999 applies.

7 Contact person for settlement system

Notices relating to the ASXCF settlement system must be given to the General Manager, Enterprise Compliance of ASX Operations Pty Ltd (the ASXCF contact person).

8 Conditions to which designation is subject

The designation of the ASXCF settlement system as a designated settlement system is subject to the conditions in the Schedule.

9 Operator is participant in settlement system

ASX Clear (Futures) is a participant in the ASXCF settlement system.

Schedule Conditions of designation of ASXCF settlement system as designated settlement system

cl 8

1 Conditions of designation

The designation of the ASXCF settlement system is subject to the following conditions:

(a)

that the ASXCF settlement system complies, and continues to comply, with all laws and regulatory requirements (whether of New Zealand, another country, or any jurisdiction of another country) relating to its operation as a clearing and settlement facility; and

(b)

that the ASXCF contact person notifies the joint regulators immediately upon becoming aware that any of the following has occurred, or may occur:

(i)

a material non-compliance with the financial resources policy, the risk management framework, or a law or regulatory requirement (whether of New Zealand, another country, or any jurisdiction of another country) relating to the ASXCF settlement system’s operation; or

(ii)

an event that materially increases risk to the ASXCF settlement system; or

(iii)

an outage or material incident; and

(c)

that the ASXCF contact person notifies the joint regulators a reasonable time before there is a change to, termination of, or expiry of any agreement for the provision of services to the system by ASX Limited or any of its subsidiaries; and

(d)

that the ASXCF contact person notifies the joint regulators a reasonable time before there is—

(i)

a material change to the financial resources policy; or

(ii)

a material change to the risk management framework; or

(iii)

a change of the specified operator; or

(iv)

a change of the ASXCF contact person; and

(e)

that the ASXCF contact person notifies the joint regulators a reasonable time before—

(i)

there is a change to an existing delegation or assignment of material powers, discretions, rights, and obligations of ASX Clear (Futures); or

(ii)

a new delegation or assignment of the specified operator’s material powers, discretions, rights, and obligations that may affect the ASXCF settlement system is made; and

(f)

that the ASXCF contact person notifies the joint regulators a reasonable time before there is a change to, or an appointment of new,—

(i)

directors of ASX Clear (Futures); or

(ii)

senior managers of ASX Clear (Futures); and

(g)

that, at the intervals and for the reporting periods required by the joint regulators, the specified operator publishes a self-assessment carried out against the required standards; and

(h)

that, at the intervals and for the reporting periods required by the joint regulators, the specified operator reports to the joint regulators, and at least annually ensures information is published, on—

(i)

the consolidated financial statements of ASX Limited and the financial resources of the ASXCF settlement system over the reporting period and the extent to which financial resources have been maintained in accordance with the financial resources policy; and

(ii)

the risk management of the ASXCF settlement system over the reporting period and the extent to which risks have been managed in accordance with the risk management framework; and

(iii)

the operational performance of the ASXCF settlement system over the reporting period; and

(iv)

the governance of the ASXCF settlement system over the reporting period; and

(v)

any material changes that have been made to the financial resources policy or the risk management framework over the reporting period and the reasons for those changes.

2 Definition of terms used in this schedule

In this schedule,—

financial resources policy means the document or documents, identified by ASX Clear (Futures) and confirmed in writing by the joint regulators, that provide the policy concerning—

(a)

the quantity of capital that it considers is required to be held to support the operation of the ASXCF settlement system for—

(i)

default and liquidity management and replenishment; and

(ii)

business and credit risk; and

(b)

margining; and

(c)

the amount and operation of the default fund

material non-compliance, material increase of risk, and material incident include matters that could—

(a)

compromise the integrity of the ASXCF settlement system; or

(b)

undermine confidence in the ASXCF settlement system; or

(c)

cause the financial resources of the ASXCF settlement system to be less than the minimum level set in accordance with the financial resources policy

reasonable time before means a period of time that, in the circumstances, is sufficient to allow the joint regulators to properly consider the effect of a change on the ASXCF settlement system and the specified operator before the change occurs

required standards means the Principles for financial market infrastructures published by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions, or any standards that replace those principles

risk management framework means the document or documents, identified by ASX Clear (Futures) and confirmed in writing by the joint regulators, that provide the framework for managing risks to the ASXCF settlement system, including enterprise risk, liquidity risk, investment risk, credit risk, pro-cyclicality risk, and risks relating to business continuity, segregation and portability, collateral, margin, access and participation, clearability, reporting and disclosure, default management, settlement, and recovery.

Michael Webster,
Clerk of the Executive Council.

Explanatory note

This note is not part of the order, but is intended to indicate its general effect.

This order comes into force on 14 August 2020.

Part 5C of the Reserve Bank of New Zealand Act 1989 provides for the designation of settlement systems and gives statutory backing for finality of settlement and netting through a designated settlement system. Part 5C also makes the Reserve Bank and the Financial Markets Authority joint regulators of designated settlement systems. Designation under Part 5C is an opt-in regime, requiring a person to apply for a settlement system to be designated.

In this order, the ASXCF settlement system is declared to be a designated settlement system for the purposes of Part 5C. The order also specifies—

  • the documents that evidence the rules of the ASXCF settlement system:

  • the specified operator of the ASXCF settlement system:

  • the contact person for the ASXCF settlement system:

  • conditions to which the designation of the ASXCF settlement system as a designated settlement system is subject:

  • that ASX Clear (Futures) Pty Limited, a company incorporated in Australia, is the operator of, and a participant in, the ASXCF settlement system, and is an operator to which section 103A of the Personal Property Securities Act 1999 applies.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 13 August 2020.

This order is administered by the Reserve Bank of New Zealand.