RBNZ consults on new mortgage bond collateral standard

On 17 November the Reserve Bank of New Zealand (RBNZ) released its long awaited consultation paper on a simple (STC) mortgage bond collateral standard.  

View the press release and consultation documents

The RBNZ believes that a more standardised and transparent framework for mortgage bonds would improve their quality and make them more marketable and has developed a proposed new format for mortgage bonds, called Residential Mortgage Obligations (RMO).  The RBNZ also believes the proposed new collateral standard would: 

  • improve the risk position of the Reserve Bank by promoting the use of higher quality and potentially more liquid, mortgage bonds as collateral in the Bank’s lending operations; 
  • support New Zealand market lenders by creating an additional funding instrument for residential mortgages; and
  • promote a deeper capital market through the availability of simple, comparable and transparent mortgage bond instruments. 

The RBNZ is seeking feedback on the terms under which it should accept mortgage bonds as collateral and the proposed new RMO standard.  The consultation closes at 5pm on 16 February 2018.

The ASF, as the key securitisation industry association in New Zealand, is open to making an industry submission to the RBNZ but to do so will work with its constituents to harness practical thoughts and feedback.  

To initiate this process the ASF proposes establishing a dedicated working group comprised of members from the existing New Zealand Market Subcommittee, members of the Australian-based working group which engaged with the RBNZ earlier this year, and other key industry representatives.  

If you would like to become involved in this process and feel you can make a contribution please contact Robert Gallimore for details of the first roundtable conference to be held on 11 December. 

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