NZX chief executive Mark Peterson said BNP Paribas Securities Services was working towards becoming a General Clearing Participant and expected to be completed within the first half of 2021 – fulfilling one of the exchange’s key strategic goals of ensuring the long-term health of New Zealand’s capital markets eco-system.

“We see this as a hugely positive signal about the untapped potential in our markets. BNP Paribas is a high-quality clearer and custodian, with an unparalleled regional clearing footprint and global credentials, committing its innovation and expertise to New Zealand.”

BNP Paribas will bring technical expertise and further enhance operational efficiencies when bringing its Third Party Clearing (TPC) model to New Zealand. This includes optionality for direct members, both with a physical presence in New Zealand and as a remote broker, to use TPC.

NZX executive director for markets development and clearing Benjamin Phillips described the move as “an important endorsement of NZX’s markets development strategy and its success in attracting wider participation by global participants” – building greater resilience, increasing the choice, expanding capacity and development of more direct connectivity to offshore capital flows.

He said it was expected to continue to drive liquidity – a primary measure of market integrity and price transparency – and build on other strategic initiatives that have seen on-market trading increase from 33% in 2015, reaching 70% in April 2020, with an average year-to-date of 62.4%.

It would offer a cost-effective solution for brokers managing large trading volumes, reduce the capital outlay of connecting to NZX markets, deliver cost savings and help brokers navigation regulations.