Yule Lawrence; Tolley AnneLAWRENCE YULE (National—Tukituki): It might sound dry and technical and it is but it is a very important part of the financial markets of the globe. It is time that the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill actually got through this House. We do need to make sure this omnibus bill passes because otherwise the New Zealand financial markets will be unable to participate in international financial markets—particularly those that use derivatives.Now Deborah Russell who's the new chair of the Financial and Expenditure Committee spoke of all the things: derivatives swaps swaptions hedging—there's all names for it but basically they're about somebody taking a risk on the value of something and hedging it against something else. If we don't have rules around this there are two things that can happen. The first is the people that take these out don't understand the full consequences of what could happen if it doesn't quite work out. In the global financial crisis people lost their shirts—many of them.Secondly the other thing that also happens is there are always two sides of an equation. There is a winner and there is a loser. So if you make money in one of these financial instruments generally it will mean that somebody on the other side is losing money. So you absolutely have to have your wits about you—particularly if you are not offsetting.Now most people in New Zealand will understand hedging—more commonly used in markets around electricity and fuel. So the likes of Air New Zealand would hedge against the price of fuel. That gives them some certainty today of the price of fuel into the future. If the price of fuel goes up they will correspondingly make the same amount of money on the other side. So the net result is the price of fuel will remain static—very similar. But it is a risky business. I think Mr McKelvie said previously that it's a gamble and it is.In my former life when I was farming I was persuaded to go into a swap by a banking entity.Dr Duncan Webb: Oh no! The ANZ?LAWRENCE YULE: It was actually the ANZ at the time. To be honest I didn't know a lot about it but we were persuaded. We took advice and we did it. We secured that against the mortgage and we borrowed internationally. It worked out very well. The net result at the end of it was that I think we netted something like $50000 over that period for doing nothing. That same year we lost about $50000 worth of land in a big storm. So it was sort of meant to be.But as I stand here in the House there are hundreds of people signed up to these type of arrangements and all care was given for us to understand but I pretty much guarantee that most people at that level in the market have very little understanding of the risks they particularly face or the debt they can get into.So we support this bill. We think this brings us in line with the G20 countries what's happening in the European Union and it makes common sense. Sometimes we have to go through difficult circumstances or see something that doesn't work for parliaments to respond and I think it is our duty and obligation to pass this bill as soon as we can. I commend it to the House.DEPUTY SPEAKER: So this is a split call. I call the Hon James Shaw.