Financial Markets Authority lauds decision recognising New Zealand’s legal framework
The European Commission (EC) has deemed New Zealand’s legal and supervisory framework for financial benchmarks equivalent to those in the European Union (EU) via a decision welcomed by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko.
According to the FMA, the EC’s equivalence decision – alongside the FMA’s recent decision to issue a benchmark administrator’s licence in favour of New Zealand Financial Benchmark Facility Limited (NZFBF), the country’s only benchmark provider – enables the continued use of the NZ bank bill rate benchmark (BKBM) in the EU as of 1 January 2026.
“This is a significant outcome for New Zealand, and for all financial institutions and businesses that trade between New Zealand and the European Union that use the BKBM in their commercial transactions,” said Liam Mason, FMA general counsel, in a media release.
“Today’s decision benefits EU benchmark users and New Zealand benchmark administrators,” said Maria Luís Albuquerque, the European commissioner responsible for financial services and the savings and investments union, in a news article from the EC.
“It proves that the revised [Benchmark Regulation (BMR)] continues to be a worldwide reference for the regulation of financial benchmarks,” Albuquerque added in the EC’s news article. “This equivalence decision acknowledges New Zealand's high regulatory standards and fosters closer cooperation between our jurisdictions.”
“It means that the more than EUR 50 billion of financial instruments currently in use in the EU that reference the New Zealand Bank Bill Rate benchmark can continue to be used without disruption from 1 January 2026,” Mason said in the FMA’s media release.
Mason explained that the BKBM functions as a base interest rate in financial contracts, used to calculate interest as a component of commercial transactions. He cited holders of interest rate swaps as an example.
“Without this decision, these financial instruments cannot legally reference the BKBM,” Mason said. “It means the businesses and organisations would need to find an alternative EU-based benchmark for their transactions, which is not feasible.”
In the FMA’s media release, Mason shared that the EC decision represents the culmination of extensive work, spanning years, to secure the EU’s recognition of New Zealand’s benchmark, including by:
In its news article, the EC said it expected New Zealand’s authorities to finalise arrangements with the European Securities and Markets Authority (ESMA) for the exchange of supervisory information on New Zealand benchmarks utilised in the EU.
