Lotu-Iiga Sam: Third Readings — 
Text is incorporated into the Bound Volume 
Lotu-Iiga Sam: Third Readings — 
[Sitting date: 17 November 2009. Volume:659;Page:7710. Text is incorporated into the Bound Volume.] 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 This is an opportunity for me to take a quick call on this legislation and also to commend the previous speaker the Hon Lianne Dalziel who was Minister of Commerce at the time the Settlement Systems Futures and Emissions Units Bill was introduced to the House. I also commend the Hon Simon Power for going forward and making this legislation the business of the new Government. The Minister has already commented on how the original bill has been separated into four bills and I shall comment briefly on the overview of what is behind the legislation. As the two previous speakers have alluded to it is designed to align New Zealand’s clearing and settlement system with international best practice and to facilitate trading in both futures and emissions units. It provides that in securities and other products so that they can be cleared and settled through designated systems that meet the expectations of our international counterparts as well as domestic participants in New Zealand’s financial sector. 
A lot of work was done in the Commerce Committee. We listened to and took into account the views of the 12 oral submitters that came to the select committee of which NZX was an important submitter as the previous speakers alluded to. Some of the key changes that we put forward in the select committee were around the definition of insolvency. The new definition “becomes subject to an insolvency event” is critical because the moment at which a participant becomes subject to an insolvency event is clear. Financial markets are pretty dynamic. They are pretty fast-moving. They are changing as we have seen in the past 12 to 18 months. Sometimes that causes and creates problems between parties and counter-parties. But it was important in our select committee that we looked at the event of insolvency and the finality of settlement. The committee proposed several amendments in this area to avoid potential problems. 
The bill as introduced provided that the finality protections extend until the earlier of 24 hours after the commencement of the insolvency or when the designation settlement system contact person had been notified or ought to have been notified of the insolvency event. We recommended as a committee that it be extended for 24 hours after the commencement of an insolvency regardless of when that contact person had notice. This was a particularly critical amendment that the committee assessed. 
We also looked at shortening the disallowance period. The committee recommended that the joint regulators could disallow a proposed amendment to the rules of a designated settlement system and this was shortened from 40 working days to 20 working days. One of the other key amendments that we assessed in the select committee was around the penalties. After comparing penalties in other jurisdictions the committee proposed a change to the level of penalty for corporate bodies. The maximum fine for a corporate body was reduced from $1 million to $750000. 
This legislation had multiparty support throughout the select committee process. Much was discerned by listening to the submitters but as the previous speaker alluded to we have to thank the expertise and the guidance that was provided by both the Reserve Bank officials and the Ministry of Economic Development officials. I think this legislation comes out with an A grade in terms of the assessment through the select committee process and the contribution of our Government officials. On that note I commend this third reading to the House. Thank you.