FMA Pushing Forward with Plans to Raise Regulatory Standards and Shed Soft-Touch Reputation
by
George Tchetvertakov
As the FMA prepares to initiate Phase Two of its sweeping financial markets reform later this year, the touchy subject of regulatory arbitrage comes into focus once more.
The Consumer Affairs Minister in New Zealand [Paul Goldsmith] today confirmed the approval and imminent implementation of the second phase of sweeping financial markets regulatory changes in New Zealand.
As reported by Forex Magnates in April, the NZ Financial Market Authority (FMA) embarked on implementing wholesale changes to its prime piece of legislation in 2013, the Financial Markets Conduct Act (FMCA). The proposed legislation delivers the most statutory reform in the country's financial markets in over 30 years.
One Step at a Time
The first phase of the new FMCA came into force on April 1st this year while the second phase has been set to commence on December 1st 2014.
Phase one of the FMC Act took effect on April 1,2014. That included the fair-dealing provisions and regulations that provided for the licensing of peer-to peer lending and equity Crowdfunding.
The second phase covers new disclosure requirements, online registers, the governance of financial products and further details supporting the remainder of the FMC Act. The mandate for the FMA has increased substantially with several hundred businesses expected to apply for licenses in the new regime.
"One of the key changes in these regulations is the introduction of a new disclosure regime that will mean shorter, clearer documents that are much more tailored to investors' needs," Mr. Goldsmith said.
Clearer disclosure rules will come into effect on December 1st. According to Mr. Goldsmith, "A new online register for offers of financial products will ensure that information on financial products and managed investment schemes is easily accessible and comparable." Adding, "This will also be up and running from December 1st."
A key factoid that will likely influence where retail brokers exactly base their operations in the APAC region is that market participants will have up to 24 months from December 1st to comply with the new disclosure and governance requirements. The two year grace period gives companies time to adjust to the new regulatory landscape, but conversely, could trigger a mass exodus in 2016-17.
Raising the Bar
The gradual, all-encompassing changes being crafted by the FMA is a testament to the regulator's admitted goal of reaching par with global leaders such as the FCA, CFTC, ASIC, FINMA, BaFIN and the Japanese FCA. New Zealand as a territory wants to make a case for being a commercially attractive, yet financially secure and responsible part of the world to conduct financial services.
Whether the new rules have a positive effect on the financial services sector is as yet unclear, because although stricter rules will likely improve the quality of retail brokers operating in New Zealand, they also will reduce their quantity. Already, the higher capital requirements have encouraged several brokers to leave the region and operate from neighbouring territories such as Australia or Singapore.
As operating in the country becomes tougher, only the better capitalised firms remain in operation. And those firms that can raise the capital to remain regulated could potentially be attracted by Malta and Cyprus as alternative territories to base operations because they offer access to the Euro-zone, a much more lucrative region than New Zealand.
Another aspect highlighted by the FMA's regulatory changes is that of 'regulatory Arbitrage'. Retail brokerages in particular are very partial to choosing their base of operations on the basis of where regulatory hurdles are lowest in relation to the perceived glamour of the host country. New Zealand obtained a reputation of being relatively lax on regulatory matters, which in the first place has attracted the high influx of foreign broker participation. Now, with the bar moving higher swathes of brokers are looking for regions with lower bars.
The Consumer Affairs Minister in New Zealand [Paul Goldsmith] today confirmed the approval and imminent implementation of the second phase of sweeping financial markets regulatory changes in New Zealand.
As reported by Forex Magnates in April, the NZ Financial Market Authority (FMA) embarked on implementing wholesale changes to its prime piece of legislation in 2013, the Financial Markets Conduct Act (FMCA). The proposed legislation delivers the most statutory reform in the country's financial markets in over 30 years.
One Step at a Time
The first phase of the new FMCA came into force on April 1st this year while the second phase has been set to commence on December 1st 2014.
Phase one of the FMC Act took effect on April 1,2014. That included the fair-dealing provisions and regulations that provided for the licensing of peer-to peer lending and equity Crowdfunding.
The second phase covers new disclosure requirements, online registers, the governance of financial products and further details supporting the remainder of the FMC Act. The mandate for the FMA has increased substantially with several hundred businesses expected to apply for licenses in the new regime.
"One of the key changes in these regulations is the introduction of a new disclosure regime that will mean shorter, clearer documents that are much more tailored to investors' needs," Mr. Goldsmith said.
Clearer disclosure rules will come into effect on December 1st. According to Mr. Goldsmith, "A new online register for offers of financial products will ensure that information on financial products and managed investment schemes is easily accessible and comparable." Adding, "This will also be up and running from December 1st."
A key factoid that will likely influence where retail brokers exactly base their operations in the APAC region is that market participants will have up to 24 months from December 1st to comply with the new disclosure and governance requirements. The two year grace period gives companies time to adjust to the new regulatory landscape, but conversely, could trigger a mass exodus in 2016-17.
Raising the Bar
The gradual, all-encompassing changes being crafted by the FMA is a testament to the regulator's admitted goal of reaching par with global leaders such as the FCA, CFTC, ASIC, FINMA, BaFIN and the Japanese FCA. New Zealand as a territory wants to make a case for being a commercially attractive, yet financially secure and responsible part of the world to conduct financial services.
Whether the new rules have a positive effect on the financial services sector is as yet unclear, because although stricter rules will likely improve the quality of retail brokers operating in New Zealand, they also will reduce their quantity. Already, the higher capital requirements have encouraged several brokers to leave the region and operate from neighbouring territories such as Australia or Singapore.
As operating in the country becomes tougher, only the better capitalised firms remain in operation. And those firms that can raise the capital to remain regulated could potentially be attracted by Malta and Cyprus as alternative territories to base operations because they offer access to the Euro-zone, a much more lucrative region than New Zealand.
Another aspect highlighted by the FMA's regulatory changes is that of 'regulatory Arbitrage'. Retail brokerages in particular are very partial to choosing their base of operations on the basis of where regulatory hurdles are lowest in relation to the perceived glamour of the host country. New Zealand obtained a reputation of being relatively lax on regulatory matters, which in the first place has attracted the high influx of foreign broker participation. Now, with the bar moving higher swathes of brokers are looking for regions with lower bars.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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