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The normally reticent Reserve Bank dealt a sharply worded serve to the stock exchange yesterday over claims about the state of the country's payments and settlement systems and futures markets.
Deputy Governor Grant Spencer said the bank took issue with views attributed to NZX regarding the current state of the payments and settlements systems.
"It is not the case that the current system is fragmented, that New Zealand's financial system 'plumbing' is not world class, and that trading of futures is not currently possible," he said. The potshot follows a newspaper article in which exchange chief executive Mark Weldon was quoted saying New Zealand markets would be much broader and deeper in a few years, allowing trading in commodities such as milk, energy, and other "futures".
Changes to the legal regime for clearing and settlement systems would make New Zealand a more attractive place to invest, Commerce Minister Lianne Dalziel said.
Weldon said the existing system was fragmented and outdated. NZX's Faster system was becoming obsolete.
He was quoted as saying New Zealand was too small for two systems.
There are two main settlement systems in New Zealand: the Reserve Bank's Austraclear system, which it has spent $4.8m upgrading, and the NZX's Faster system.
Austraclear is used by a variety of institutions not just banks as reported, but also corporates, trustees and brokers, to settle transactions in bonds, shares and cash, Spencer said.
Last month, it handled average daily trades of $6.7 billion against Faster handling average daily trades of $125 million.
- NZPA
