Dalziel Lianne: Settlement Systems Futures and Emissions Units Bill — First Reading 
Dalziel Lianne: Settlement Systems Futures and Emissions Units Bill — First Reading 
[Volume:650;Page:19252] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Settlement Systems Futures and Emissions Units Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Commerce Committee. The Settlement Systems Futures and Emissions Units Bill is designed first to allow for trades in securities and other products to be cleared and settled through designated systems that meet the expectations of international and domestic participants in New Zealand’s financial sector; second to align the regulation of exchanges seeking to operate in both the securities and futures markets and to provide that a person approved by the operator of an authorised futures exchange is an authorised futures dealer; and finally to clarify the regulatory treatment of emissions units to support the development for the market for emissions units. 
Settlement systems are used to give effect to transactions in our financial markets and as such they contribute to a well-functioning capital market. Designation of a settlement system gives statutory backing to the systems rules to support finality of settlement which in turn gives a designated settlement system protection against potential claims from the liquidator of any failed participant. International standards can be met without designation which is why this is not being made mandatory. However without an explicit regulator it can be very difficult to convince participants that a settlement system meets international standards. At present New Zealand’s legislation provides for the designation of payment systems under Part 5C of the Reserve Bank of New Zealand Act 1989. Settlement systems could also be designated under such provision but such designation would provide protection only to the payment component of the transaction not to the settlement of the property component of the transaction. Under the Settlement Systems Futures and Emissions Units Bill the designation regime in Part 5C of the Reserve Bank of New Zealand Act will be extended to systems that clear and settle products as well as payments. This will be jointly overseen by the Reserve Bank and the Securities Commission. 
The Settlement Systems Futures and Emissions Units Bill also aligns the regulatory environment for exchanges seeking to operate in both securities and futures markets by amending the Securities Markets Act 1988 so that an exchange registered under Part 2B of that Act may be registered either in respect of securities markets only or in respect of both securities markets and futures markets. The bill also seeks to clarify the regulatory treatment of emissions units to support the development of the market for emissions units. This applies to both units issued under binding regulations such as the New Zealand emissions trading scheme and units issued in the voluntary market. And can I please make the point to the House and for those who are listening and are interested that none—none—of these technical amendments are necessary for the operation of the New Zealand emissions trading scheme. I want to make it clear that this is a facilitative measure. I actually had a feeling that some of the members of the Opposition may have misunderstood that point which is why I wanted to make it crystal clear. 
Simon Power 
: What am I going to talk about now? Ruined another speech! 
Hon LIANNE DALZIEL 
: Now that I have the acceptance of the other side that that is now crystal clear we will not have any unnecessary debate on that matter. The bill amends the Securities Act 1978 to ensure that the issuance of emissions units will not need to meet the requirements of the regulatory regime for offers of securities or the relevant provisions of the Securities Markets Act unless they are part of an investment scheme. In this regard emissions units will be treated like other property. 
The bill also extends the priority provided by section 97 of the Personal Property Securities Act in respect of shares and other securities to emissions units. Under this Act emissions units will be defined as investment securities. Without this amendment the benefits of anonymous exchange trading could be lost because a purchaser would actually otherwise need to check the Personal Property Securities Register to ascertain whether anyone else had a registered security interest over the specific emissions units they were seeking to purchase. Finally in order to make clear that the definition of futures contract extends to a futures contract for emissions units the bill amends the Securities Markets Act to include emissions units in the definition of commodity providing certainty that futures contracts in emissions units are regulated by that Act. 
In conclusion I record my appreciation of the participation of the financial sector throughout the consultation process on this bill and I encourage the financial sector to remain actively involved in the refinement of the bill through the select committee process. I also acknowledge the work of the officials and I appreciate that other parties in the House are keen to see progress on this bill as part of an overarching commitment to building a sound and effective regulatory environment. I commend the bill to the House.