Stronger links to global financial markets to benefit economy

Financial markets legislation which has passed its third reading in Parliament will contribute to a well-functioning economy by providing New Zealand with continued access to foreign markets, Commerce and Consumer Affairs Minister Kris Faafoi said.

“The Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill brings New Zealand into line with international reforms. It will ensure that New Zealand-based financial institutions, which operate in foreign markets, including through the use of derivatives contracts, can continue to do so with confidence.

“This is important because it means New Zealand now complies with reforms to strengthen the operation of international financial markets that were introduced by the G20 and the European Union in the wake of the Global Financial Crisis.

“Stronger compliance with international rules makes it less risky and less expensive for financial institutions, like banks, to use instruments such as derivatives to manage risk when raising funds offshore.

“While this is largely a technical Bill, it has very clear benefits because it avoids substantial economic risks.

“New Zealand consumers and businesses who borrow from banks will ultimately benefit from the Bill. Without it, our financial markets would be less stable and could create instability around interest rates.

“I thank everyone who made submissions and provided feedback during the Bill’s consultation stages.

“As the Bill developed, we wanted to ensure it would work for industry, benefit the economy, and maintain strong linkages with global markets in line with new reforms that strengthen the operation of these markets. I believe we’ve achieved that,” Mr Faafoi said.