New Zealand puts securities settlement system up for sale

New Zealand puts securities settlement system up for sale

The Reserve bank of New Zealand is looking for a buyer for the NZClear security settlement and depository business after deeming it a non-core business that requires significant investment.

The Reserve Bank has owned and operated NZClear - formerly Austraclear - for 25 years. The move to sell off the business follows a 2014 strategic review and a request in December for Registrations of Interest (ROI) from potential vendors for the procurement of new settlement systems to replace the current ESAS high value gross settlement system and NZClear systems.

Reserve Bank deputy governor and head of operations Geoff Bascand says that NZClear requires significant investment or replacement.

"A strategic review in 2014 of the Reserve Bank’s payment and settlement systems concluded that securities settlement is not the Bank’s core business," he says. "The Reserve Bank is keen to see if another specialist operator can provide securities settlement and depository services that meet both the Bank’s requirements and those that the market has become accustomed to."

While the Bank has a preference for a new owner, he says, it is also exploring the options for a full-scale replacement in the event that it fails to find a buyer.

“Our earlier Request for Information for Payment and Settlement Systems confirmed our view that a range of systems are available that would potentially meet the Bank’s requirement, if needed,” says Bascand.

New Zealand's chief regulators say they will be monitoring the outcome and will continue to hold sway over the system under new ownership.

"The joint regulators will have adequate regulatory influence over the system, particularly so in the event of distress," reads a statement. "In order to achieve this outcome, the system in its entirety will be located and operated within New Zealand. This requirement does not, however, preclude offshore ownership."

Interested parties are asked to express their interest by 23 June 2015. Documentation is available via the Government Electronic Tenders Service (GETS).

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