The RBNZ and the Ministry of Business, Innovation, and Employment launched a public consultation on the implications of foreign margin requirements for over-the-counter (OTC) derivatives in New Zealand. The consultation seeks views on potential targeted legislative changes to enable the affected New Zealand entities to comply with these rules. The consultation also seeks stakeholder views on the scope of issues identified and the adequacy and effect of the amendments proposed.
Although New Zealand has no margin requirements in OTC derivatives, several banks registered to operate in New Zealand will likely have to comply with the margin rules being implemented in foreign jurisdictions. Margin is a collateral exchanged by the derivative market participants to protect against the risk posed by credit exposures and to reduce the risks of financial market contagion if a derivative contract counterparty defaults. The prompt and free availability of margin provided by New Zealand banks could be impeded, due to some features in New Zealand laws covering statutory management and creditor priorities, potentially impairing banks’ access to derivative products and markets they use for funding and hedging. The soundness, efficiency, and global integration of the country's financial sector could be protected by addressing the issue. The consultation identifies specific impediments to compliance in New Zealand law and proposes a number of targeted legislative amendments to address them.
Related Link: Consultation Document (PDF)
Comment Due Date: August 24, 2017
Keywords: Asia Pacific, New Zealand, RBNZ, OTC Derivatives, Securities, Banking, Margin Requirements
Previous ArticleEC Proposes to Amend Application Date of IDD and Related Regulations
Next ArticleESMA Updates Q&As on MIFID II in October 2017
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.