The CCH Facility is the proposed solution to the technical and market structure issues that have led to market outages over the past year. It is designed to ensure that New Zealand’s securities markets maintain their integrity, are immunised from failures and outages in other parts of the securities landscape, and to protect New Zealand’s reputation as a destination for international capital. It is also designed to position the securities markets generally for future growth and international participation.
The CCH Facility would see NZX extend its clearing and settlement capacity to include a snapshot of each issuer’s security holders (and their holdings) which would be uplifted from the relevant registry immediately prior to the opening of trading. All trades in each issuer's securities during trading hours will be recorded in the CCH Facility and a record of the revised security holding data will be downloaded to the relevant register of that issuer at the close of trading.
“The proposed CCH Facility would bring New Zealand’s capital markets significantly more into line with peer international markets, including Australia, and fit with IOSCO principles,” said Elaine Campbell, NZX Head of Regulatory & Public Policy. “Clearly, it’s important from a reputational perspective that New Zealand is seen to be meeting international expectations and standards.”
NZX is currently seeking public submissions on the CCH Facility proposal and will be working with industry participants to develop the best possible solution for its market.
Separately from this, NZX is assessing the feasibility of entering the commercial registry business in New Zealand as well. This is a purely commercial decision based on competitive opportunities present in the current environment.
“NZX has identified several areas in the registry landscape in this country where competitive tension could be brought to bear to improve customer outcomes,” said Carl Daucher, NZX Head of Strategy. “It is just one of the growth initiatives we have been assessing to various degrees over the past 18 months and we see value in pursuing it further.”
If NZX decides to progress with the registry initiative, it will be run as a subsidiary, separated entirely from NZX’s duties as market operator and regulator. The registry business would not be designed together or linked to the CCH Facility, would utilise different technology and would be built as a stand alone commercial entity. Moreover, it would be on a level playing field with the other registry businesses in the New Zealand market and be required to undertake all the obligations of other registry businesses.
NZX will provide further details as required under its continuous disclosure obligations or as otherwise required.
