Robertson GrantFINANCIAL MARKET INFRASTRUCTURES BILLSecond ReadingHon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the Financial Market Infrastructures Bill.SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon GRANT ROBERTSON: I move That the Financial Market Infrastructures Bill be now read a second time. I want to thank the Finance and Expenditure Committee for the hard work that they did in ensuring that this bill has come back with a unanimous recommendation including some amendments which I will speak about shortly that have been agreed to. It is the hard work of select committees on bills like this—that don't necessarily draw massive attention or get great headlines—that underpins what this Parliament is all about.When we think about financial market infrastructures (FMIs) it's a little easy to let those words glaze over. They have been called—Hon Chris Hipkins: Ah!Hon GRANT ROBERTSON: —I know colleagues will find that hard to believe—the plumbing of the financial system and this is what makes sure that the money and the transactions that happen in our financial system continue to flow around unimpeded by blockages—Hon Chris Hipkins: This isn't helping. Hon GRANT ROBERTSON: Mr Hipkins I thought you'd enjoy that metaphor. I might have to move on from it. It is important that in any system the plumbing works well to ensure that there is an easy flow in this case of money. Mr Speaker I know and I am moving on from the metaphor you'll be pleased—Madam Speaker. Sorry a change there. Madam Speaker you'll be pleased to know I'm moving on from that metaphor. But FMIs are the systems that essentially enable the electronic payments that we have to be made. They also facilitate the transactions of buying and selling of financial products. That includes payment systems—things that people would perhaps be a little bit more familiar with—but it also includes the settlement systems which are a critical element of the way that our financial system works. This is the arrangements both between banks and between banks and the Reserve Bank as well: central security depositaries trade repositories—all of the things that enable financial transactions to take place. What we're doing in this piece of legislation is establishing a new framework for the regulation of these financial market infrastructures in New Zealand and actually closing a gap within our regulatory system and broader economy.It would be fair to say Mr Speaker that the international agencies who—ASSISTANT SPEAKER (Hon Jacqui Dean): Order!Hon GRANT ROBERTSON: —Madam Speaker. I'll just keep looking at you Madam Speaker. So the international agencies who comment on these issues and in particular the IMF have raised concerns as far back as I believe—I'll just check it—the Financial Sector Assessment Program review that was done by the IMF in 2017 about whether or not New Zealand's regulatory environment for financial market infrastructures was appropriate. It's currently regulated under two different Acts in our legislative framework: the Reserve Bank Act Parts 5B and 5C and also the work of the Financial Markets Authority. Essentially what the International Monetary Fund told us was that those parts of the legislative framework were no longer fit for purpose or sufficient anyway. In particular they didn't cover some of the types of FMIs that are now in regular use particularly for central counterparties and they lack the full range of regulatory and supervisory tools that you would expect and that the public would now expect in terms of the way those systems work. So in order to close that gap we have put this bill forward into Parliament and it has now gone to the select committee.The select committee as I say did an excellent piece of work. What they did was look at—and I'm looking forward to hearing from members of the select committee shortly in some detail around the work that they did because I know they took it very seriously indeed. But among the issues they have now put forward amendments that have been unanimously agreed on are broadening the circumstances where regulators may agree that one of them acts as the sole regulator; simplifying the thresholds for when Ministers can grant approval or consent to decisions being made by a regulator; clarifying the relationship between the general purposes of the bill and principles of the bill and the purposes and principles that relate to crisis management powers; removing the requirement of ministerial consent before the regulators can issue a notice requiring a rule change; and removing the requirement for the ministerial consent to a new operator scheme. So those amendments if I am interpreting them correctly from the select committee are essentially to ensure that the scheme operates even more smoothly than it has in the past. Ministerial consent alongside regulator consent is not always required. The regulators act independently they know what they're doing and they need to be able to do that in a timely manner.The amendment around crisis management powers: I am particularly pleased with the work that the committee did in this area. This is an ongoing issue when it comes to the operation of our regulators. We don't want there to be the need to use crisis management powers when it comes to the way that our banks or financial institutions run but being absolutely clear about how they will work is critical. In New Zealand we only need to look back to the period around the global financial crisis and the collapse of some of the finance companies in New Zealand to know that unfortunately there will be times when crisis management powers are required and being very explicit about what the role of a regulator is when that situation comes to pass is important. It is no different when it comes to these financial market infrastructures—so that we are very clear about that. So again I thank the select committee for their hard work and reporting back unanimously those changes.From time to time in this House we will have bills of this nature come forward. They are technical; they are about the way that our regulators work. We put a great deal of faith and trust in both those regulators and also the officials who advise us on them because it is not in all seriousness in the day-to-day work of members of Parliament as to exactly how these work. So I want to thank all of the officials who have been part of making sure that we have this bill here. It has had a reasonably long gestation period interrupted by COVID but I do believe we are passing or moving forward in the legislative process a piece of law that actually is going to serve New Zealanders well to give them confidence in the systems where their money flows through but also that the regulators involved have the tools that they need to make sure that they can intervene where it is necessary. So with that I commend the bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.