Young Jonathan: Settlement Systems Futures and Emissions Units Bill — Second Reading 
Young Jonathan: Settlement Systems Futures and Emissions Units Bill — Second Reading 
[Volume:658;Page:7607] 
JONATHAN YOUNG (National—New Plymouth) 
: 
 It is my pleasure to stand and speak in support of the Settlement Systems Futures and Emissions Units Bill. I believe that our Government has brought changes to the emissions trading scheme because we are seeking to bring a better balance between our economic opportunities and our environmental responsibilities. We felt that the advantages that the previous speaker the Hon David Parker spoke of would bring very strong disadvantages to other sectors of our community so we believe that our more measured approach is far more sustainable. 
This bill which was introduced by the Hon Lianne Dalziel towards the end of last year was reinstated in the 49th Parliament in December because it is essential legislation particularly with regard to emissions trading in the global sense. Putting regulation in place for that to happen is very important. The member in charge of this bill is the Hon Simon Power the Minister of Commerce. It returned from the Commerce Committee in June this year. 
There are a number of issues that this bill addresses. It is a very complex bill. Most New Zealanders probably will not understand it but people in the foreign exchange securities and futures area of work and interest will be very interested in this bill. One of the areas that was discussed in the select committee was the choice of a regulator for designated settlement systems. Several submissions questioned the efficiency of appointing joint regulators for the designation of settlement systems. However we recommend the joint regulator model be retained because it is effective without compromising administrative efficiency. 
We considered these two potential models of regulator: the Reserve Bank of New Zealand as a sole regulator with a duty to consult with the Securities Commission and the Securities Commission and the Reserve Bank as joint regulators. It has been suggested that the oversight of settlement systems is primarily a matter of prudential regulation and as such the Reserve Bank is best placed to perform that role. However the settlement of transactions per se is primarily a regulatory matter for the Securities Commission. Thus both the Securities Commission and the Reserve Bank have a legitimate interest in the operation of settlement systems in the financial sector. To provide for a sole regulator with a duty to consult the bill would need to be amended to provide protocols around the duty to consult the other party its role in the process and the extent to which the views of the other party need to be taken into account. That would be less flexible than providing for joint regulators that may coordinate internally and more seamlessly. 
The assessment of an application for designation is a complex task. The work of preparing guidelines in assessing an application is split between two regulators under the joint regulator model. Such work can be allocated according to the expertise of the agency and its particular interest in settlement systems. In this regard the joint regulator model is underpinned by provisions in the bill that allow the joint regulators to share information and have regard to and rely upon any relevant information work or matters held or produced by the other joint regulator. There are expected to be only a handful of applications for designation during the life of the legislation. Potential opportunities for both the applicants and the regulators to refine procedures and reduce costs over time are therefore low. One application will likely come from the Reserve Bank in its role as operator of Austraclear. As a joint regulator the Securities Commission can be a witness to the separation between the Reserve Bank’s role of settlement system regulator and operator. The joint regulator model does not require applicants and designated settlement systems to duplicate effort across two regulators. The applicants are able to choose which regulator to lodge their application with. 
As I mentioned this is a complex bill and a complex matter. I thank the officials who have put in a tremendous amount of work in preparing a bill that has this level of importance for securities settlements and emissions trading in our country. Thank you.