Breaking: New Zealand FMA’s Phase Two Slated to Take Effect, Major Shift Coming?

Phase two of New Zealand’s Financial Markets Authority (FMA) is poised to take effect on December 1, ushering in a new era of capital markets and financial services laws that will revamp investor disclosure.

Phase one of the FMA’s initiative took place this past April, which Forex Magnates portended would trigger a broker exodus out of the country. By and large this has been the case, albeit on some basis, given the heightened regulatory climate displacing external brokers.

In particular, Phase two will focus on licensing provisions, affecting several hundred businesses and triggering a substantial shift in the quality of investor disclosure for financial products in New Zealand.

Indeed, this ambition has been a long time coming, its genesis having its roots in a 2009 NZ Capital Market Development Taskforce report. The launch of Phase two largely meets the goals of the Financial Markets Conduct Act 2013 (FMC Act), capping off a fairly rapid pace of Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term in the island nation.

According to Rob Everett, Chief Executive of the FMA Rob Everett, in a recent statement on the regulation, “New Zealand now has some of the most modern markets regulation in the world. 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’ve 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.”

“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,” Everett added.

According to an FMA statement, the paramount provisions of the FMC Act include:

• Product 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 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.

As a result of the passage of the mandate, hundreds of organizations and market participants are expected to be eyeing new licenses over the next 24 months – this should bring the jurisdiction of the FMA to over 11,000 firms and entities.

Phase one of the FMC Act took effect from April 1, 2014, its primary composition can be accessed via the following link.