Financial Markets Conduct Act
The Financial Markets Conduct Act (FMC Act) governs how financial products are created, promoted and sold, and the ongoing responsibilities of those who offer, deal and trade them. It aims to facilitate capital market activity, in order to help businesses to fund growth and individuals to reach their financial goals.
The Financial Market Conduct Bill was introduced into Parliament in October 2011 and passed into law in September 2013. The new law repeals the Securities Act 1978, Securities Markets Act 1988, and incorporates and amends a range of other related investment legislation.
The implementation dates for the new law will be phased as follows:
- phase 1 on 1 April 2014 comprising general fair dealing obligations, key growth-focussed initiatives including employee share schemes and enabling financial market participants to become licensed, including for crowd-funding;
- phase 2 on 1 December 2014 comprising the new disclosure requirements, go-live of the online registers, licensing obligations and the remainder of the Act.
Market participants will have up to 24 months from 1 December 2014 to comply with the new disclosure and governance requirements. For example:
- Continuous issuers – such as managed funds issuers or non-bank deposit takers – will have a two year transition period in which they can continue to offer and allot securities under the Securities Act 1978.
- New one-off issues – such as initial public offerings or corporate debt offers – can still be made under the Securities Act 1978 if the prospectus is registered before December 2015 and the allotment completed within the two year transition period.
- But, new KiwiSaver schemes and superannuation schemes must register under the FMC Act and immediately comply with the new regime.
We have consulted on the content of FMC Act regulations and on 26 September 2014 we published a full unofficial draft of the FMC Act regulations.
The Ministry released a discussion paper on the regulations to be made under the FMC Act in December 2012 and the Minister announced decisions on proposed regulations in June 2013.
Progress to date and current consultation
Decisions on Discretionary Investment Management regulations
In June 2014 the Minister announced further decisions on the regulation of discretionary investment management services (DIMS) under both the Financial Markets Conduct Act 2013 and the Financial Advisers Act 2008.
These decisions included measures to make the regulatory regime more accessible for smaller DIMS providers and transitional arrangements for existing providers.
On 6 August 2014 the Minister of Commerce announced decisions on regulations to support the Financial Markets Conduct Act.
This is a supplement to the third exposure draft of regulations under the Financial Markets Conduct Act 2013.
On 15 July 2014 NZX was granted a Ministerial exemption from full continuous disclosure requirements under the Securities Markets Act 1988 (SMA) to operate an alternative disclosure regime on a new market targeted at small and medium sized enterprises.
Feedback was sought on fee setting for phase 2.
Feedback is being sought on a third exposure draft regulations for phase 2.
Feedback sought on a second exposure draft regulations for phase 2.
Licence fees for market services providers under the Financial Markets Conduct Act 2013 and increase of some existing Financial Markets Authority Fees
Submissions were invited on the proposed licensing fees of market services providers under the Financial Markets Conduct Act 2013 ("FMC Act") and on increases to some existing Financial Markets Authority ("FMA") fees.
Financial Markets Conduct Regulations – draft regulations and detailed requirements for disclosure documents
The Financial Markets Conduct Act 2013 will be implemented in two phases with phase 1 coming into effect on 1 April 2014 and phase 2 on 1 December 2014. A substantial body of regulations is needed to implement it.
On 27 June 2013 the Minister announced decisions on proposed regulations to support the Financial Markets Conduct Bill.
On 11 December 2012, the Ministry released a discussion paper on the Financial Market Conduct Regulations. Submissions closed 1 March 2013 and have been published.
The Financial Markets Conduct Bill (FMC Bill) was introduced into Parliament on 12 October 2011, and was reported back from select committee on 7 September 2012. A supplementary order paper containing further changes to the Bill was released on 22 April 2013.
An exposure draft of the Financial Markets Conduct Bill was released in August 2011, with a request for submissions on the technical detail prior to the draft Bill being finalised and introduced to Parliament. The Ministry received 73 submissions on the Bill.
On 22 June 2010 the Ministry released a discussion paper on the review of securities law. 98 submissions were received, which formed the basis for ongoing consultation and the development of recommendations to Ministers.