Today, the Reserve Bank of New Zealand and the Securities Commission declared that NZCDC Settlement System that has been made recently is now a ‘designated’ settlement system.

The newly established settlement system will come under Part 5C of the Reserve Bank of New Zealand Act. The new system will be implemented from this month.

New Zealand Clearing and Depository Corporation run the NZCDC Settlement System. The NZCDC is the fully-owned subsidiary of NZX Limited and is planning to come up with many products like, dairy, energy, etc.

According to Toby Fiennes, who is the Reserve Bank Head of Prudential Supervision, the newly designated settlement system will provide legal support to a final settlement and will also keep a track of the transactions.

Designation also means that once a transaction has been done under the settlement system, then it’s not possible take back the transaction in case the participant withdraws from the system.

The settlement systems can get a designation only when they clear all the assessment system and get a green signal from the regulators. Although it is not mandatory for a settlement system to acquire a designation in New Zealand.

The other two designated settlement systems are the Reserve Bank's Exchange Settlement Account System and the Continuous Linked Settlement System. These two systems are run by CLS Bank International.