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Payment Systems and Netting Bill 1998

Part 2 Integrity of approved RTGS payment systems

   

6   External administration not to affect transactions carried out on the day of appointment

             (1)  If:

                     (a)  a participant in an approved RTGS system goes into external administration; and

                     (b)  a payment or settlement transaction is executed through the system at any time on the day on which the external administrator is appointed; and

                     (c)  the transaction involves the payment of money, or the transfer of an asset, by the participant;

the payment or transfer has the same effect it would have had if the participant had gone into external administration on the next day.

             (2)  This section has effect despite any other law.

7   Obligation to notify system administrator of external administration

             (1)  A participant in an approved RTGS system must notify the system administrator if:

                     (a)  the participant; or

                     (b)  another participant whose transactions the participant settles through the system;

goes into external administration. The participant must give the notice as soon as practicable after the participant becomes aware of the external administration.

             (2)  A person does not contravene subsection (1) if:

                     (a)  they took reasonable steps to comply with that subsection; or

                     (b)  the system administrator was already aware of the external administration by the time the person was required to notify the administrator under subsection (1).

             (3)  A person must not contravene subsection (1).

Penalty:  Imprisonment for 5 years.

8   Application for approval of payment system

             (1)  A person may apply to the Reserve Bank for approval of a payment or settlement system.

             (2)  The application must:

                     (a)  be in the prescribed form; and

                     (b)  be accompanied by the documents:

                              (i)  specified in the regulations; or

                             (ii)  required by the Reserve Bank.

9   Reserve Bank may approve payment system

             (1)  The Reserve Bank may approve the system if it is satisfied that:

                     (a)  systemic disruption in the financial system could result if a participant went into external administration and the system were not approved under this section; and

                     (b)  the system is supported by a legally enforceable arrangement between participants in the system for the irrevocable settlement of transactions in real time; and

                     (c)  the rules governing the system establish a system administrator for the arrangement; and

                     (d)  the system administrator has the resources, competency and integrity needed to administer the system; and

                     (e)  the system rules provide that if a settling participant goes into external administration, the system administrator may suspend from the system:

                              (i)  the participant; and

                             (ii)  any general participant for whom that participant is the sole sponsor; and

                      (f)  the system rules provide that if a general participant goes into external administration, the system administrator may suspend that participant from the system; and

                     (g)  the system rules require a settling participant to assume the obligations of any participant whose transactions they settle through the system if the participant fails to fulfil those obligations;

and of any other matters specified in the regulations.

             (2)  In deciding whether to approve a system, the Reserve Bank must have regard to the following:

                     (a)  whether the system rules:

                              (i)  allow all participants to settle transactions on their own account; or

                             (ii)  provide both for participants who can settle transactions on their own account and for other participants ( settling participants ) and for participants who cannot settle transactions on their own account ( general participants );

                     (b)  whether the system rules provide for different obligations for settling participants and general participants and, if they do, whether they:

                              (i)  require a general participant to have a settling participant to settle their transactions through the system; and

                             (ii)  require a participant who goes into external administration to notify its settling participant (if any) of the external administration as soon as practicable; and

                            (iii)  require a settling participant to notify the system administrator as soon as practicable if it becomes aware that a participant whose transactions it settles through the system has gone into external administration;

                     (c)  whether the system rules require participants to notify the system administrator as soon as practicable if they go into external administration;

                     (d)  any other matters specified in the regulations;

                     (e)  any other matters the Reserve Bank considers relevant.

             (3)  An approval:

                     (a)  must be given in writing; and

                     (b)  may be given subject to the terms and conditions specified in the approval; and

                     (c)  is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .