New Zealand’s Financial Markets Authority (FMA) has announced that the Financial Reporting Act, which will implement market-wide parity for financial reporting obligations in NZ, is poised take effect on April 1, 2014, via an FMA statement.
The Wellington-based FMA is New Zealand’s paramount securities and governmental watchdog organization for financial activity in the country. In recent years, the region has seen an encroachment from a variety of financial firms, notably in the realm of FX, given such lax regulatory measures to operate and report trade figures in the country.
Financial Reporting Act Sets Minimum Requirements, Aims for Compliance Cost Savings
The Financial Reporting Act will stipulate that small and medium-sized companies will be required to prepare simplified statements on their financial activity by April 1. Signed earlier this week by the Order in Council, the act effectively sets minimum requirements for these statements – ultimately it is hoped the fullfillment of this act will yield significant compliance cost savings for many businesses that participate, a point of previous contention among skeptics.
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This clearly underscores a need for NZ, and according to Commerce Minister Craig Foss in a recent statement on the regulation, “Now is the time for small and medium-sized companies to make sure they understand how the changes affect their financial reporting obligations. Medium-sized companies will no longer be required to produce complex financial statements under the Financial Reporting Act, which will mean a substantial reduction in compliance costs for most companies with annual revenue between $2 million and $30 million.”
Furthermore, “As the New Zealand economy grows, the government is focused on removing obstacles for companies. Changing the requirements for financial reporting to Inland Revenue will reduce the compliance burden for most companies, freeing them up to concentrate on building their business and creating jobs,” added FMA Revenue Minister Todd McClay.
Regulation Still Has a Way to Go in Terms of Unlicensed FX Providers
Indeed, the country has previously taken measures to foster increased transparency, such as the Financial Markets Conduct Act, which was passed last September in an effort to regulate derivatives and FX markets. According to Chris Smith, Head of CMC Markets in New Zealand in an exclusive interview with Forex Magnates, “The new act will create a level playing field at the end of this year once the law is implemented in full. One of the challenges will be to see how the policing of unlicensed FX providers will be enforced by the FMA, and if new regulations for derivatives providers coming into play can ensure client funds are more secure and providers have strict licensing processes in place. Currently New Zealand is seen as a low-risk environment to enter and unlicensed providers risk damaging the NZ FX industry. The new derivative licensing regime was a long time coming through parliament that should have happened earlier – numerous unlicensed FX providers are presently operating in NZ.”