Parliament has passed the first reading of the bill that will see New Zealand’s “continued access to key global financial markets.”
The Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill aims to align New Zealand’s financial markets law with new international regulations, Commerce and Consumer Affairs Minister Hon Kris Faafoi said. He noted the bill is critical to ensuring financial institutions that rely on derivatives can continue to transact seamlessly in international financial markets.
“Financial institutions like the Super Fund, ACC and banks use derivatives to hedge against factors such as currency risks when they make investments or raise money offshore,” Faafoi explained. “Being able to access the global financial markets ensures these entities can invest and raise funds cheaply and efficiently.
“This ultimately benefits New Zealand consumers and businesses, who are the end-users of these entities,” he said.
Moreover, the minister noted the bill will also help New Zealand avoid potentially substantial damage to the economy. Without these amendments, New Zealand’s financial institutions could lose access to offshore funding markets because they don’t comply with new requirements that have resulted from overseas reforms, he added.
The bill is now referred to the Finance and Expenditure Select Committee with a report set to come back to the House by July 22.