O'Connor GregGREG O'CONNOR (Labour—Ōhāriu): Thank you Madam Speaker. In a previous life I was a detective and when I was assigned to the fraud squad it was with much trepidation that here was I a country lad from the West Coast; what did I know about fraud? However the advice I got from my detective sergeant was that actually my job was to make things easier and clarify them so the jury can understand them. To a certain extent that's what we're actually doing with this bill. Yes it is a bill that is pertaining to some very complicated financial issues; however like many of these things it's only once it is removed that we suddenly realise how important it is.A very good example of that was of course the GFC. Now the financial market infrastructures (FMIs) which many of the previous speakers have discussed defined—no FMIs actually failed during the GFC. But you will have heard one of the previous speakers Andrew Bayly talking about derivatives which are a type of FMI. It's the derivatives market that did fail. Just to simplify that somewhat so that people understand why you do need some regulation around that—again one of the previous speakers Mr Seymour said Well don't think that the people who are involved in the financial market are a dodgy lot." Well they're not necessarily a dodgy lot; they're an entrepreneurial lot and they're a very clever lot and they'll also push the limits. Their job is to find new products that everyone can make some money out of. The world is awash with them.One of those derivative products was essentially to take a large number of mortgages and put them into one package. They were called "derivatives". In those large number of packages as you might imagine there were some good mortgages; there were some bad mortgages. The theory being that if there were some failures of mortgages the good mortgages would cover. So someone who wanted an exposure to the American mortgage market could buy one of these derivatives buy one of these packages with maybe up to 10000 or 100000 mortgages in it secure that they had a good exposure to the American market. Well of course that worked fine until those derivative products got filled up with bad mortgages mortgages belonging to people called NINJAs—no jobs no income—and were bound to fail. Now that would have been fine if only maybe 10 percent of them had been that. But as it turned out in the end a large number of those mortgages were that. So once this became known—there's a very good movie called The Big Short. I'm limited with my time here but if anyone would like to know a little bit more about that well the movie The Big Short actually outlines it. The result of that they themselves didn't nearly bring the system down; it was the fact that each of the banks each of the financial institutions had exposure to these things and they knew the exposure they had. So if they knew that we've got exposure to these things then the guy or the other bank we're dealing with clearly will have the same exposure so we better not expose ourselves to them. And what stopped happening was money stopped moving and it was the cessation of money moving around which actually nearly brought down the financial system. That was why we saw the intervention why the banks had to be given the money the guarantees to keep going.So that will just give some idea of why you need some pretty good regulation safeguards around products that many of us don't know about that actually have more exposure to than we know because many of us do have exposure to managed funds through our superannuation through different ways. So it's again only when these things fail that we start to understand why it is absolutely necessary. If you wanted to get technical—and some of the previous speakers have got technical—what are the key FMIs in New Zealand these things that we seek to protect? The real-time high-value inter-bank payment system that is the key to money and capital markets—well that's exactly as I've described it. So if money stops moving—today there'll be people who'll be settling on their mortgages. That will require one financial institution to move money to another financial institution. Well if that stops for any reason there is some doubt of the stability of either of those orders it won't happen. So of course that's very much part of this. The FMI that's not exactly an FMI in itself but in a broader issue it is.The global high-value inter-bank payment system for the New Zealand foreign exchange market—again of course a little bit broader this is the money that overnight were moving in their millions those money traders who wake up at 3 o'clock in the morning to check their phones to check everything else to see how things are moving. But most importantly is that it does keep moving. Everyone has faith. This again was exposed to New Zealand to a certain extent. We heard from the submitters that people started to look at New Zealand and say "Well actually you actually don't have the necessary safeguards here. We're going to be sending billions millions of dollars to New Zealand." And the New Zealand currency I think at one stage was the 10th most traded currency in the world. While we might be a small country I do remember being in New York looking at The New York Times thinking—oh sorry it was The Wall Street Journal thinking there won't be much mention of New Zealand in here. And here it was a picture of the New Zealand dollar talking about it because again the New Zealand dollar came out to a large number of trusts set up in New Zealand money was moving through here. So we actually do need to ensure that we have that for that international exchange.The retail payment system where New Zealand consumers and businesses conduct their financial transactions—again similar big organisations moving money around; absolute faith that I'm going to send you many millions of dollars. We need to have that faith. This is the system that enables that. They then become the FMIs bearing in mind what I'm talking about here the key FMIs being identified. The security settlement system for fixed interest in equities securities market—equities obviously shares again moving around. Finally the securities settlement system and securities depository for exchange markets—now I'm not 100 percent certain of that last one. Even I with my massive skill from my years on the fraud squad struggle with that one to actually understand. But the others I think make plenty of sense and why we actually do need that. I was fortunate enough to be on the Financial and Expenditure Committee. We actually heard many of our submissions via Zoom during the lockdown which was actually quite a good time when we didn't have many other distractions and were actually able to sit and read and get a bit of an understanding of this. Some of the submitters we had—there weren't a great number. We only received nine submissions and four of them were from operators of these FMIs. So it was a good opportunity to actually get that understanding knowing that one day I was going to have to stand in this House and explain it to those people at home. Although Mr Woodhouse was here before he talked about believing that probably no one beyond the first two speakers would understand too much about this. I think he'd be very impressed with my colleague Barbara Edmonds' unique and in-depth understanding of this.We also heard from an industry association New Zealand Financial Markets Association. It would be very surprising for something this important if we didn't hear from them and they made some interesting recommendations; a couple of law firms Russell McVeagh and an individual lawyer as well. In fact the fact we didn't have a lot of submitters did actually give us the opportunity to actually put some time and question—perhaps again being on Zoom and without perhaps the time constraints we normally have—and to actually go into these. Again there was a considerable number of—there were several changes made to the bill and we will be speaking about them when it comes to the committee of the whole House.But essentially what I would say is that for those—again many of my colleagues here have gone into the more technical aspects of it. But as I said at the start what people really need to understand is when they either as a small part player paying a mortgage or whether there are large sums going around the world as part of our exposure we need to have a system that everybody can trust so that the money doesn't stop flowing because when money stopped flowing that's when we had the GFC and that was when we required the regulators to print large amounts of money—or not print it but actually get money moving so that actually the—Jamie Strange: Quantitative easing.GREG O'CONNOR: —quantitative easing—thank you my colleague there. The word did escape me for that moment. That was what was required just to keep the money moving. I have no hesitation in commending this to the House because this is one way of giving us in New Zealand the confidence but importantly our international trading partners the confidence that we will be able to keep money moving. I commend this bill to the House."