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Screenshot of a breaking news alert e-mail from Q2 2017
The second phase of New Zealand’s new capital markets and financial services law takes effect from Monday December 1. Phase two includes licensing provisions that extend to several hundred further businesses, and a major shift in the quality of investor disclosure for financial products.
This additional refinement of the relatively new regulatory structure in New Zealand is a clear indication that the days of being able to list a firm on a rudimentary register and then conduct business from any location overseas are long gone and that New Zealand can stand forth as a prominent authority which aims to emulate its Antipodean neighbor, Australia.
With the appointment of new chairman Murray Jack who joined the FMA this week from global professional services Deloitte where he held the position of chairman of the firm’s New Zealand operation, the regulator is bringing on board highly experienced key personnel.
The chief executive of the Financial Markets Authority (FMA), Rob Everett, said phase two of the Financial Markets Conduct Act 2013 (FMC Act) largely completes the regulatory overhaul that began with the Capital Market Development Taskforce’s final report in 2009.
“New Zealand now has some of the most modern markets regulation in the world,” Mr Everett said. “The law that takes effect on Monday was the subject of wide consultation. It has broad support among finance professionals, businesses, legal advisers and auditors. Firms are adjusting steadily to the new regulation. Indeed, investors and consumers are seeing results already. For example, in debt and equity offers, we have already seen significant improvements this year in offer documents.
“Boards of issuers have recognized the objectives of the FMC Act and applied the clear, concise and effective principle to their offer documents, even though the new disclosure standards only take effect from 1 December” he continued.
Mr Everett said the FMC Act was part of a comprehensive overhaul of regulation. In addition to the FMC Act’s focus on licensing and conduct, the overhaul also included an expanded prudential role, for the Reserve Bank, covering banks, insurers, and non-bank deposit-takers.
“New Zealand has taken a coherent approach, recognizing that regulation works when it’s implemented as a whole. It’s also a coordinated approach that’s designed to provide results without imposing substantial, unnecessary costs.”
Since coming into effect, the FMA has played an instrumental role in bringing to book some orchestrators of criminal activity, including David Ross, who perpetuated the largest ponzi scheme in New Zealand history. On discovering Mr. Ross’ FX ponzi scheme, the FMA worked in conjunction with the New Zealand Serious Fraud Office in order to ensure conviction, after which Mr. Ross was committed to jail.
Features of phase two of the FMC Act include roduct disclosure statements for financial products – including debt and equity – made concise, and subject to page limits. An online register will include all the material information on offers under the FMC Act. Offers can be made under the Securities Act 1978 during a transition period, but the FMA encourages issuers to shift to the new arrangements at the earliest opportunity.
Further professionals will come under FMA licensing, including managers of registered schemes (managed investment schemes), derivatives issuers, and independent trustees of restricted schemes. Providers of discretionary investment managements services (DIMS) will also be licensed.
Several hundred organisations and individuals are expected to apply for licences over the next two years, bringing more than 11,000 firms, professionals, registered schemes, and funds under the FMA’s mandate.
For the official announcement from the New Zealand FMA, click here.