Reserve Bank of New Zealand Notice of Approval of Exchange Settlement Account System Rule Change

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Financial Market Infrastructures Act 2021
Section 39(3) Notice of Approval of Rule Change
Exchange Settlement Account System (ESAS)
The Reserve Bank of New Zealand (the regulator), under section 39(3) of the Financial Market Infrastructures Act 2021 (Act) approves the rule change pursuant to the application by the Reserve Bank of New Zealand, as the operator of ESAS, under section 39(1) of the Act dated 21 March 2025. The rule change relates to the Exchange Settlement Account Terms and Conditions (incorporating service levels), forming part of the ESAS rules pursuant to Paragraph 7(a) of the Financial Market Infrastructures Act Designation Notice (ESAS) 2023. The rules are changed from bilateral terms and conditions to multilateral industry rules. The rule changes are set out in the Annex to this Notice and described below:
 Title: The title of the rules document is changed to the Exchange Settlement Account System Rules.  Part AA: Effect of Rules: Sets out the binding and enforceable effect of the rules.  Definition of Accountholder: Any person that has been accepted by the Reserve Bank as an Accountholder in the System (and whose accountholder status has not been terminated in accordance with the Rules).  Rule 5.2: If a relevant Authorised Payment Instruction remains unsettled, the Accountholder may provide a further instruction to revoke the Original Instruction. The Revoking Instruction can be actioned in accordance with the Settlement Submission Mechanism advised to the Accountholders by way of a written notice.  Rule 20.4: The Reserve Bank can amend or replace the rules at any time without the consent of the Accountholders. The Reserve Bank will allow Accountholders a reasonable opportunity to comment on the proposed rule change.

 A number of other consequential and minor amendments that give effect to the overall rule change. The rule change takes effect from 09:00 on 1 May 2025.

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24 April 2025
Scott McKinnon
Director of Specialist Supervision

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Annex to section 39 Notice
Clause/Rule Amendment
EXCHANGE SETTLEMENT ACCOUNT SYSTEM RULES-provided 21 March 2025 Add new clauses A and B
Part AA: Effect of
Rules:
Delete
Accountholder paragraph

A. Binding commitment on parties
Each Accountholder and the Reserve Bank acknowledges that:
i. it must comply with these Rules;
ii. these Rules are a valid, binding and enforceable contract between
each of them; and
iii. the use of the System by the Accountholder constitutes its
acceptance of these Rules.
B. Point at which Rules have effect
These Rules have effect as from the effective date noted on the cover page of these Rules. They remain in effect until they are:
i. terminated or withdrawn by the Reserve Bank; or
ii. amended in accordance with clause 20.4.
The Accountholder named on the covering page to these Terms and Conditions (Accountholder) and Reserve Bank of New Zealand (Reserve Bank) agree to be bound by these Terms and Conditions, governing the operation of the Accountholder’s Settlement Account or Settlement Accounts with the Reserve Bank and the provision of certain services relating to ESAS, as they may be amended from time to time by agreement by the Accountholder and the Reserve Bank. Add Definition of “Accountholder”:
Definitions and
Interpretation
Accountholder means any person that has been accepted by the Reserve Bank as an Accountholder in the System (and whose accountholder status has not been terminated in accordance with these Rules) and includes a former Accountholder where the context requires. Minor amendment to Public Holiday definition Public Holiday means:
(b) any other day designated as a New Zealand public holiday under any New Zealand legislation and any other public holiday scheduled by the New Zealand Government at less than 10 days’ notice. Add Reserve Bank definition Reserve Bank means the Reserve Bank of New Zealand in its capacity as operator of ESAS.

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Clause/Rule Amendment
Add rule 5.2
5.2 If the relevant Authorised Payment Instruction (the Original Instruction) remains
unsettled, the Accountholder may provide a further instruction to revoke the Original Instruction (Revoking Instruction). The Revoking Instruction can be actioned in accordance with the Settlement Submission Mechanism advised to the Accountholders by way of a written notice pursuant to clause 4.1. Add new clause on amendments Rule 20.4:
Pages 23-24

20.4 Amendments
(a) The Reserve Bank may amend or replace these Rules (a Rule Change) at any time without the consent of the Accountholders. (b) Before a Rule Change is promulgated by the Reserve Bank, the Reserve Bank will allow Accountholders a reasonable opportunity to comment on the proposed Rule Change unless:
(i) in the Reserve Bank’s reasonable opinion, the Rule Change is required urgently to mitigate a potential threat to the System; or (ii) the Regulator has issued a notice to the Reserve Bank pursuant to section 40 of the FMI Act requiring the Rule Change. The Reserve Bank will determine the period and process for that consultation. (c) The Reserve Bank is not bound by the comments of Accountholders arising from that consultation process. A failure by the Reserve Bank to consult does not affect the validity of a Rule Change. (d) Each Rule Change will:
(i) be submitted by the Reserve Bank to the Regulator for approval in accordance with section 39 of the FMI Act; (ii) be notified by the Reserve Bank to each Accountholder in accordance with Rule 20.5; and (iii) take effect on the date specified in that notice (the Rule Change Date), which will be determined by the Regulator in accordance with section 38 of the FMI Act. (e) The Reserve Bank will advise Accountholders as soon as practicable:
(i) of each Rule Change Date; or
(ii) if the Regulator has decided not to approve a Rule Change in accordance with section 39(4) of the FMI Act, that the Rule Change will not occur. (f) If an Accountholder does not wish to become bound by a Rule Change, that Accountholder may resign close its account in accordance with Rule 4.1 8.1. If an Accountholder receives notice of a Rule Change and remains an Accountholder after the Rule Change Date, that Accountholder is deemed to have accepted and agreed to be bound by that Rule Change.

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Clause/Rule Amendment

Deletion of previous
Rule 20.4
On pages 24, 25 and
(b),
(c)
(d)
(e)
(f)
(g)
(h)
(I)
(j)
(k)
(l)
(a)(g) Unless expressly provided otherwise, no Rule Change affects any right accrued, or obligation incurred, prior to the relevant Rule Change Date. (b) An amendment to these Terms and Conditions must be in writing, signed by an authorised representative of both parties, except in the circumstances set out in clause 20.4(k). (c) The Reserve Bank will (and is hereby authorised by the Accountholder to) advise all other Settlement Accountholders of these Terms and Conditions and of any amendments to these Terms and Conditions. (d) The Reserve Bank will inform the Accountholder and each other Settlement Accountholder of any amendments to the ESAS Terms and Conditions that operate between it and every other Settlement Accountholder and will ensure that all ESAS Terms and Conditions authorise the Reserve Bank to provide such information to the Accountholder and to other Settlement Accountholders (which the Accountholder hereby authorises). (e) If the Reserve Bank is party to any ESAS Terms and Conditions that are different from these Terms and Conditions, then the Reserve Bank will offer to enter into an agreement with the Accountholder amending these Terms and Conditions so as to incorporate those different terms (or such of them as the Accountholder reasonably requests). (f) Each set of ESAS Terms and Conditions will contain a provision in the same terms as this clause, and the Reserve Bank will not amend any such provision in the ESAS Terms and Conditions with another Settlement Accountholder without the prior written consent of the Accountholder. (g) Notwithstanding paragraph Error! Reference source not found., clauses 5, 7, 10.5 and this clause 20.4 may only be amended with the prior written consent of all Settlement Accountholders (including the Accountholder) and the Reserve Bank, except in the circumstances set out in clause 20.4(k). (h) Subpart 1 of Part 2 of the Contract and Commercial Law Act 2017 applies to clauses 10.5, 13.1 and this clause 20.4, which are intended to be for the benefit of other Settlement Accountholders (as well as the Accountholder) and may be enforced by other Settlement Accountholders. (i) Following the agreement of Settlement Accountholders to amend the ESAS Terms and Conditions that apply to them, the Reserve Bank will apply to the Regulator for approval of the proposed amendment in accordance with section 39 of the FMI Act. (j) If the Regulator approves the amendment under section 39(3) of the FMI Act, the commencement date of any amendment to the ESAS Terms and Conditions shall be determined by the Regulator in accordance with section 38 of the FMI Act. (k) If the Regulator decides not to approve the amendment under section 39(4) of the FMI Act, the Reserve Bank must, as soon as practicable, notify the Accountholder that the amendment will not commence.

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Clause/Rule Amendment
(l) If the Regulator issues a notice to the Reserve Bank pursuant to section 40 of the FMI Act that it considers, on reasonable grounds, that an amendment to these Terms and Conditions:
(i) is required to ensure that these Terms and Conditions comply with any applicable FMI Standard; or (ii) is appropriate for the purposes of applying sub-part 5 of Part 3 of the FMI Act (which addresses the validity and enforceability of settlements under designated FMIs) to ESAS, Minor amendment to Rule 19.3
19.3 The Chief Executive Officers of the parties (in the case of the Reserve Bank, it is
the Governor) must personally or through nominees attempt to resolve the dispute, on the basis that the parties wish to retain an ongoing relationship. Deletion of clauses
20.5 on pages 25
and 26; and
20.5 (c) on page 26

Deletion of previous signature page 27 pages 26-27 including section
20.5 (c)
20.5 the Reserve Bank will, following the process set out in sections 39 to 42 of the
FMI Act in respect of such amendment, amend these Terms and Conditions in the manner approved
20.5 (c) The initial e-mail address, and street address of each party is set out below:
Reserve Bank of New Zealand
2 The Terrace
WELLINGTON
Attention: Director of Payment Services
Telephone: (04) 471-3734
E-mail: steve.gordon@rbnz.govt.nz
Accountholder: [ ]