Bayly AndrewANDREW BAYLY (National—Hunua): Thank you Madam Speaker and lovely to see you back in the chair this year. It's my first opportunity to speak and I just wish everyone well and hope they had a great Christmas break and back for an exciting year of course.Now we've already heard that National is supporting this Financial Market Infrastructures Bill. I think to some extent there's been a lot of canvassing of what it means. I thought for many people listening in there are a lot of acronyms there's a lot of terminology being used in this bill. I thought it might be useful to just spend a couple of minutes trying to put into layman's terms what this bill is actually trying to achieve. Essentially we have—and have for quite some time—had alternative mechanisms financial instruments called derivatives and the like which financiers have used to buttress and to help with their trading of different financial instruments in the market. The derivatives act in a way that they disaggregate the risk and returns and actually help manage it.So for instance if you wanted to take on a fixed loan at a certain rate in a certain currency and you were forced to do that—let's say borrowing in New Zealand dollars—you may at one point want to swap that out for Australian dollars and use a different interest rate. You can use derivatives to design the instrument that you actually ultimately want. Banks are the prime users of derivatives but not exclusively so. A lot of our large financial institutions ACC all use these types of products to manage their risk and to in a way enhance their returns.So people have been talking about trade repositories and swap data—this is the system by which all those derivatives are captured and actually collated so actually people can start to understand where the risk lies. You will recall during the major meltdown in the world financial crisis a lot of it was driven out of derivative trading and where people didn't actually understand the full amount of derivative risk that they had. So as a result of the G20 coming together in September 2009 there were rules that were put together to try and make sure that from a worldwide perspective there was enough understanding of where these liabilities lay and who was holding them so that if ever there was a situation it was clear where the liability actually lay.There are two types of derivative tradings. One is over the counter and one is exchange trading. Now exchange trading is basically—the analogy is if you were selling and buying shares you would be selling those shares over the New Zealand stock exchange and therefore that's a very transparent transaction. There's no problem with those and they're all accounted for even if you're doing a derivative equivalent on an exchange. Where we have an issue is what's called over-the-counter trading and that is where you have a direct trade between two parties that is not exposed to the transparency of an exchange. What this bill is essentially trying to do is put in place a better framework for dealing with those over-the-counter derivative trades.Originally it was this sort of opt-in arrangement where if you're a financial institution—and I just use ACC as an example. If it was trading over the counter possibly some of those trades would be recorded and obviously they would be because they're a very reputable institution. But what this situation allows is for the regulator to say basically well we want to capture those trades and making sure that they come into this arrangement which is what this bill is all about. So the powers for the regulator are quite significant. It moves basically from voluntary to a system where at the behest of the regulator they can make sure that for people who are obviously trading a lot or may be perceived as a higher risk there is greater transparency around their trades.There's a whole lot of other stuff in the bill that we'll be going through in select committee but essentially that is the purpose of this bill. Of course it was a bill first proposed by National and we're getting through to the stage where it's finally come back into the House. We need to move this bill through but we will be making sure that it is appropriate and doesn't end up being inappropriate for a very significant level of financial trading that is done in New Zealand but at the same time making sure we meet our international obligations. Thank you very much.