Goldsmith PaulHon PAUL GOLDSMITH (National): Thank you Mr Speaker. It's my pleasure to speak on this the first reading of the Financial Market Infrastructures Bill and to signal that the National Party will be supporting this legislation through—certainly at the first reading. We do want to—I mean this was a piece of legislation which relates to improving the regulatory framework for financial instruments market infrastructures that relate to as the Minister of Finance said to the plumbing of the financial system which we don't think about very often we just assume that it works. And for the most part it does work. It works effectively and New Zealanders are very well-served by the system that we have in place right now. That is a fairly light regulatory framework. We've had many visits from international institutions such as the IMF over the years which say we should regulate more in this area. And they said that again in 2016 and the previous National Government of which I was a part agreed with recommendations from the Reserve Bank that we should move in this direction. And that's why we support the overall thrust of the bill which in essence is establishing a regime whereby the Reserve Bank and the Financial Markets Authority (FMA) as joint regulators would have information-gathering powers for all financial market infrastructures (FMIs) in order to monitor the broader sector and identify potential systemic risks. Then secondly an FMI which is identified as being significant could be required to be designated under a revised designation regime. And then thirdly the joint regulators would have enhanced regulatory oversight powers for designated FMIs including the powers to set regulatory requirements oversee their rules investigative and enforcement powers and crisis management powers. And finally where relevant designated FMIs would be able to access the legal protection around settlement finality—that is some final clarity around where they sit and netting that currently exists under Part 5C of the Reserve Bank of New Zealand Act. Now of course the critical question is: in all these fine arrangements have we got the details right? And this bill's been actually well signalled and well consulted over a number of years with the industry and so we have a reasonable confidence that the balance will be right. But we're interested particularly in when to test whether the broad powers of intervention given to the Reserve Bank and the FMA are justified and in particular when bodies consider the market or specific institutions are in a state of distress—the limit where they make that decision and whether that's set appropriately.I suppose the point that worries me slightly is that when we look at the regulatory impact statement from the Reserve Bank they make the point that the nature of the analysis of the regulatory impact statement—which is where the officials sit down and work out whether the costs of a proposed new set of regulations are justified by the benefits or that the costs are less than the benefits gained which is what you need to do—they're not particularly reassuring to be honest.It says The Reserve Bank requested cost estimates from [the] industry during … consultations but only one organisation provided such figures. … A full cost-benefit analysis would normally provide more certainty that the proposals … have a net benefit for New Zealand. However given the lack of cost estimates alongside the low probability high impact nature of [an] FMI failure [etc. etc.] … [that any] full cost-benefit analysis is unlikely to be robust enough to provide meaningful additional information and could be misleading."So the upshot of that seems to be that they're really just having a guess as to whether the whole regime is justified and so we will certainly be taking a great deal of interest in the select committee process hearing directly from market participants to reassure us that this step towards greater regulation in this space is justified that the appropriate levels are laid down and that New Zealanders—who ultimately pay for any costs imposed by regulation through fees in the banking system—are getting something for that extra cost.We need to actually see some numbers around that and have some real effort because what often happens is that Government departments write a regulatory impact statement early on at the start of a bill and say "Well we haven't actually got the detail. We don't really know but we'll come back and come up with something more detailed later on in the process in the future." and they never do. So once we've started the process it just rumbles on and we never actually get to the bottom of it. So we just want to signal right here right now that we'll be paying very close attention to that.But in the broader sense of the word we're very supportive of the instinct behind the bill and we're going to work constructively and collaboratively with the Government in the development of this legislation. Thank you Mr Speaker."