RBNZ puts security settlement and depository business NZClear on the block

The Reserve Bank is putting its NZClear security settlement and depository business on the block.

The sale comes at a time the technology behind NZClear requires significant investment or replacement.

NZClear is used to settle fixed interest and equity transactions and cash transfers with an average total value of about $7 billion per day. It includes a central securities depository that represents a critical record of the beneficial ownership of a substantial portion of NZ dollar securities, the Reserve Bank says.

"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. 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,” Reserve Bank deputy governor and head of operations Geoff Bascand said in a statement.

“NZClear members are important stakeholders, so we intend to provide regular briefings as this process evolves. The Bank is committed to ensuring that the needs of the NZClear customers are met and that high service standards are maintained.”

“While the Bank has a preference to see a new provider of NZClear services, we have been exploring system replacement solutions, in the event we are unable to find a suitable alternative provider,” Bascand added.

The Reserve Bank has owned and operated NZClear for 25 years but believes market solutions are now available and offer potential for further development and innovation, said Bascand.

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