Submission to RBNZ on the High Value Clearing System designation

Payments NZ has provided a further submission to The Reserve Bank of New Zealand – Te Pūtea Matua (RBNZ) in response to its proposal to designate the High Value Clearing System (HVCS) under the Financial Market Infrastructures Act 2021 (FMI Act). RBNZ asked for the Company’s views on:

• the rules which are applicable to the HVCS (so that they can be specified in the designation notice under section 29(1)(b) of the FMI Act; and
• the anticipated compliance costs for Payments NZ and its Participants.

This submission follows our earlier submission of September 2025

Our position

• We remain concerned that designation could introduce unnecessary cost, complexity, and delay without delivering commensurate benefits to the financial system.
• If designation proceeds, it is critical that the approach taken recognises the unique nature of Payments NZ as a rules body, rather than an operator of payments infrastructure.

Scope of rules proposed for designation

The RBNZ has indicated that all rules applicable to HVCS need to be specified in the designation notice, regardless of whether those rules are material. .

• Bringing both material and non‑material rules into scope could:
• increase compliance costs
• slow down routine rule changes
• reduce flexibility and innovation
• introduce risk where urgent rule changes are required

In our view, it would be better if only the rules that relate to material, systemic aspects of the HVCS were included for the purposes of designation.

Stand‑alone HVCS rule set

The RBNZ suggested that Payments NZ consider restructuring its rules into a separate HVCS‑only rule document.

After careful consideration, we do not believe this would be practical or beneficial because:

• Many rules apply across all clearing systems and would need to be duplicated
• Multiple rule sets could:
• create operational risk
• reduce clarity for Participants
• require expensive changes to embedded systems and processes
• The current integrated rule structure provides a clear, enforceable framework for Participants

Compliance costs and impacts

We have provided the RBNZ with indicative information on compliance costs, noting that:

• it is currently unclear how the FMI Standards would apply to Payments NZ and the HVCS
• this uncertainty makes accurate cost estimation difficult

Key cost drivers identified include:

• ongoing RBNZ approval for rule changes
• increased assurance requirements
• publication and re‑publication of HVCS rules
• gap analysis and remediation work against FMI Standards
• additional costs for Participants

Impact on Participants and market entry

Payments NZ has a constitutional objective to support open access and facilitate new entrants joining our clearing systems.  There is a concern that the additional compliance costs associated with designation could be a barrier for smaller Participants and new entrants.

We also note that compliance costs could divert funding from innovation and system enhancements.

Our view

We believe the existing framework already provides strong legal certainty and operational resilience for the HVCS.

Any further regulatory action should be supported by a clear cost‑benefit case and be carefully tailored to avoid unintended consequences for Participants and the wider payments ecosystem.

We value our long‑standing, constructive relationship with the Reserve Bank and look forward to continuing engagement on these matters.

You can read our submission to the Reserve Bank here.