The framework was released following a consultation with industry members and stakeholders.
FMIs are a set of critical systems that facilitate electronic payments and financial market transactions, the regulatory agencies said. Under the Financial Market Infrastructure Act, RBNZ and FMA have joint responsibility to oversee FMIs, which are sometimes referred to as the plumbing of the financial system.
Christian Hawkesby, RBNZ deputy governor and general manager of financial stability, said the framework provides guidance for determining whether an FMI will be deemed of systemic importance.
“The finalised framework balances the need for flexibility in accounting for the specific circumstances of individual FMIs; and the importance of ensuring transparency in regulatory decision-making,” Hawkesby said.
“We appreciate the constructive feedback we received from stakeholders and have adjusted the regulatory approach to take this feedback into account,” said Paul Gregory, acting director of capital markets, FMA. “Changes include the treatment of critical service providers and discretion regarding the publication of material breaches.”
The regulators also published their responses to the feedback on their proposed approach to developing standards for FMIs. These include the incorporation of the internationally recognised Principles for Financial Market Infrastructures and adopting them in a way that is suitable for New Zealand.
RBNZ and FMA said they will soon hold a consultation on an exposure draft of the standards.
Hawkesby said that, due to key role that FMIs play in the financial system, the disruption or failure of a systemically important FMI can potentially result in adverse impacts on financial markets, businesses, and consumers, and could threaten the stability of the financial system.