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Deposit Takers Act 2023

Crisis management and resolution - Moratorium and restriction on resolution trigger

292: Moratorium and restriction on resolution trigger do not limit or affect certain rights under netting agreement or rights under rules of designated FMI

You could also call this:

"Rules to help a bank in trouble don't affect special agreements between banks or their rights in certain markets."

Illustration for Deposit Takers Act 2023

When a bank is in trouble, some rules might stop it from doing certain things. You need to know that these rules do not affect some special agreements called netting agreements. These agreements are like contracts between banks that help them work out how much money they owe each other.

If a bank has a netting agreement, it can still end transactions or calculate how much money is owed, even if the bank is in trouble. You can read more about netting agreements in section 310A of the Companies Act 1993. The rules also do not affect the bank's right to use some property to secure its obligations.

There are also some rules that apply to things called financial market infrastructures, or FMIs. You can read more about FMIs in the Financial Market Infrastructures Act 2021. If an FMI is involved, the rules do not stop the bank from exercising its rights under the FMI's rules.

Some words in this section have special meanings, like "designated FMI", "netting", and "participant". You can find these meanings in section 5 of the Financial Market Infrastructures Act 2021. The rules of an FMI are also important, and you can read more about them in section 35 of the Financial Market Infrastructures Act 2021.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS532157.

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291: Moratorium does not limit or prevent obligations incurred or rights granted after deposit taker enters resolution, or

"You can still pay debts or use your rights even if a deposit taker is in trouble."

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293: Moratorium does not limit or prevent certain things in relation to derivatives, etc, or

"A moratorium doesn't stop you doing certain things with special agreements, like derivatives."

Part 7Crisis management and resolution
Moratorium and restriction on resolution trigger

292Moratorium and restriction on resolution trigger do not limit or affect certain rights under netting agreement or rights under rules of designated FMI

  1. In the case of a netting agreement to which sections 310A to 310O of the Companies Act 1993 apply,—

  2. section 284(1)(h) does not apply to a right of set-off provided for in the netting agreement; and
    1. sections 284(1) and 287 do not limit or prevent the exercise of any of the following rights under the netting agreement:
      1. the termination, in accordance with the netting agreement, of all or any transactions that are subject to the netting agreement by reason of the occurrence of an event that is specified in the netting agreement and is an event (including entering resolution) that occurs not later than when the licensed deposit taker enters resolution:
        1. the taking of an account, in accordance with the netting agreement, of all money due between the parties to the netting agreement in respect of transactions affected by the termination; and
        2. sections 284(1) and 287 do not limit or prevent the exercise of any right referred to in section 284(1)(d) to (f) in respect of any property of the licensed deposit taker (A) to the extent that the right is exercised to enforce, or to assist in enforcing, the due performance, by A, of obligations entered into by A under a recognised multilateral netting agreement (within the meaning of section 310A of the Companies Act 1993).

          1. In the case of a derivative, a relevant security interest, or a specified instrument,—

          2. subsection (1)(b) does not apply to the extent that it relates to section 287; but instead
            1. section 294 applies.

              1. If subpart 5 of Part 3 of the Financial Market Infrastructures Act 2021 applies to a transaction or an arrangement,—

              2. sections 284(1) and 287 do not limit or prevent the exercise of any right relating to the calculation of a netted balance under the rules of the FMI; and
                1. sections 284(1) and 287 do not limit or prevent the exercise of any right referred to in section 284(1)(d) to (f) in respect of any property of the licensed deposit taker (A) if the right that is exercised—
                  1. is provided under the rules of the FMI; and
                    1. has been granted to secure, or to assist in securing, the due performance, by A, of obligations entered into by A under those rules.

                    2. In this section,—

                    3. designated FMI, netting, and participant have the meanings given in section 5 of the Financial Market Infrastructures Act 2021; and
                      1. netted balance means any amount calculated in accordance with the rules of a designated FMI as the net debit payable by, or on behalf of, a participant of the designated FMI to, or on behalf of, another participant of that designated FMI for all or any claims or obligations to which those rules apply; and
                        1. rules is to be read in accordance with section 35 of the Financial Market Infrastructures Act 2021.

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