Regulatory Alerts2022-02-27
Foreign margin requirements for over-the-counter derivatives
The Reserve Bank of New Zealand enacted the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 to enable local entities to comply with foreign margin rules for uncleared OTC derivatives. These legislative amendments prioritize the enforcement of security interests over margin by derivatives counterparties, ensuring their claims rank ahead of other creditors during insolvency proceedings. The reforms specifically target prescribed entities such as registered banks and central counterparties to minimize adverse effects on other creditors while maintaining the coherence of New Zealand's corporate insolvency regimes.
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