An agreement between NZX and the Reserve Bank has been reached, regarding the settlement and clearing services to New Zealand’s capital market.

To guarantee an efficient clearing and settlement infrastructure which will support the development of capital markets in New Zealand, the Capital Markets Development Taskforce recommended that the NZX and the Reserve Bank should work together.

To cement the relationship, the stock exchange operator and the central bank have signed a memorandum of understanding (MOU).

In New Zealand, NZX runs principal security settlement system called New Zealand Clearing Limited and Reserve Bank runs NZClear, another securities settlement system. In New Zealand, the MOU between the NZX and the Reserve Bank is supposed to be a vote of confidence for the cooperative approach to clearing and settlement. As per Mr. Mark Weldon NZX chief executive, they are confident about the result of working over eight-month period with the Reserve Bank, and that the result will be good for both companies.

He further said that the alliance will be good for the effectiveness, soundness and efficiency for the market.

New Zealand Clearing Limited will now be eligible for backup liquidity support from the Reserve Bank as per Reserve Bank deputy governor Grant Spencer, Further, to create a unified approach to deal with industry issues, both companies have agreed to launch a joint advisory council.