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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 Markets 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 of the new law has been 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.

 

The Financial Markets Conduct Regulations 2014 have been made and are available on www.legislation.govt.nz. The regulations come into force on 1 December 2014 (together with consequential amendments to other regulations) and contain the supporting detail needed to implement phase 2, including:

  • New disclosure requirements (for the new “product disclosure statement” and the online registers)
  • Supporting detail for the new governance and licensing obligations in the Act
  • Roll over of existing regulations for financial product markets
  • Details supporting the 2-year transition regime in 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.
  • Existing providers of discretionary investment management services will have until December 2015 to be licensed (but must have put in a licensing application or have updated their adviser business statement by 1 June 2015).
  • There is transitional relief for licensed derivatives issuers of between 6 and 12 months from new disclosure, financial adviser, and client funds handling requirements (with some additional short-term relief while licence applications received before December 2014 are being processed).
  • A prescribed period has been provided to allow old “wholesale offers” exemptions to be relied on for a further six months.
  • Unlicensed financial product markets need not be licensed until 1 December 2015.

 

Further information about FMC Act implementation and transition is provided by the Financial Markets Authority:

FMC Act Implementation

 

 

Progress to date

Financial Markets Conduct Regulations made – November 2014

The FMC Regulations were made on 3 November 2014 and will come into force on 1 December 2014. The final regulations correct errors and inconsistencies in the unofficial draft of the FMC Regulations released on 26 September 2014 as well as addressing some further policy thinking on other matters.

Read more about the final FMC Regulations and further development post 1 December 2014.

 

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.

Read the Cabinet paper and other information

 

NZX Growth Market

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.

Read more about NZX Growth Market

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.

Read more about Licence fees for market services providers under the Financial Markets Conduct Act 2013 and increase of some existing Financial Markets Authority 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.

Read more about Financial Markets Conduct Regulations – draft regulations and detailed requirements for disclosure documents

Financial Market Conduct Regulations decisions – June 2013

On 27 June 2013 the Minister announced decisions on proposed regulations to support the Financial Markets Conduct Bill.

Read more about Financial Market Conduct Regulations decisions – June 2013

Financial Market Conduct Regulations Discussion Paper - December 2012

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.

Read more about Financial Market Conduct Regulations Discussion Paper - December 2012

Financial Market Conduct Bill – October 2011

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.

Read more about Financial Market Conduct Bill – October 2011

Exposure Draft Bill – August 2011

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.

Read more about Exposure Draft Bill – August 2011

Review of Securities Law Discussion document – June 2010

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.

Read more about Review of Securities Law Discussion document – June 2010

Last updated 13 November 2014