Eagle PaulPAUL EAGLE (Labour—Rongotai): Thank you Mr Assistant Speaker. It's my pleasure to take a split call—five minutes—on this bill the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill and it is the first reading. Can I acknowledge the Minister—he's no longer here—for introducing this important piece of work. In terms of what I thought I would cover—I didn't want to double up—I would just mention various things from the regulatory impact assessment for the financial markets because I thought there was some good work in there. Some of the work done by the Ministry of Business Innovation and Employment has certainly contributed to making this bill what it is today. So can I thank the officials for that.One of the points for those who like myself are not entirely knowledgeable about this bill was really understanding what is the policy problem or what is the opportunity—everything from the way that New Zealand's banks use offshore and domestic finance to fund their activities. They enter into these derivatives contracts to protect or hedge against the exchange rate risk of raising money in foreign currencies. For example other large public sector asset managers like the Accident Compensation Corporation and the New Zealand Superannuation Fund also use derivatives for hedging purposes.In terms of banks and the public sector asset managers they are facing a barrier to accessing international derivatives markets due to the Group of 20—the G20 as it's been mentioned before—and those rules for certain types of derivatives. Those rules include the requirement for parties to over-the-counter—or OTC as a colleague mentioned—uncleared bilateral derivative exchange securities also known as the margin under a contract to support the performance of it. If one party fails to honour its obligation—for example if it's financial distress—then the other party can call on a margin to shield it from any losses that might result from its counterpart's non-performance. That's a good basis for developing this bill. Part of their advice too talked about the need for more Government intervention.So this I guess targeted amendment legislation was deemed to be required to ensure or enable those affected entities to comply with the foreign margin requirements and continue to access international derivatives markets. A non-regulatory response was said not to be possible as the impediments to compliance are contained in the legislation. Who's affected? These amendments are not intended to change the behaviour of entities that are affected by the new derivative requirements rather preserve the status quo of the industry behaviour but instead the amendments are intended to ensure that affected entities have the ability to enter derivative transactions that comply with new requirements and market practice.One of the most important things I think is the stakeholder views and they were tabled around what they thought that problem was. So agencies were consulted over a six-week period in 2017 between July and August and they were all in agreement essentially on the nature of the problem and they were supportive of what's being proposed. So I think that's commended and can I commend this bill to the House.