NZX Ltd's new NZCDC Settlement System has passed a regulatory hurdle ahead of its start date on Monday.Settlement systems, or payment systems, essentially carry out the necessary processes to complete, or settle, transactions.The Reserve Bank of New Zeala
NZX Ltd's new NZCDC Settlement System has passed a regulatory hurdle ahead of its start date on Monday.
Settlement systems, or payment systems, essentially carry out the necessary processes to complete, or settle, transactions.
The Reserve Bank of New Zealand (RBNZ) and the Securities Commission today declared the new NZX system a designated settlement system under the Reserve Bank of New Zealand Act.
This gives statutory backing to the finality of settlement and netting of transactions so that in the event of failure by a participant, transactions cannot be unwound.
Designated settlement systems are subject to ongoing oversight by the Securities Commission and the central bank.
Last year the RBNZ and NZX said they were in discussions on a potential joint venture to provide clearing and settlement services in New Zealand.
The RBNZ is the operator of New Zealand's Austraclear settlement system, which provides back-office functions for the sale and purchase of various securities.
NZX has been working on the new NZCDC Settlement System, which is operated by New Zealand Clearing and Depository Corp, a wholly-owned subsidiary of NZX.
The RBNZ said in background notes that it has kept the designation and joint venture processes completely separate.
It is not compulsory for settlement systems operating in New Zealand to be designated.
The RBNZ's Exchange Settlement Account System and the Continuous Linked Settlement System operated by CLS Bank International.
NZX said it now had all the regulatory approvals necessary for the operation of its new clearing and settlement system.
It advised that following the successful completion of system migration steps, the first date of operation for the system will be September 6.
