The Financial Markets Authority gathers market intelligence
about local and global developments that may affect capital markets
generally or particular investors.
We gather and analyse relevant information to ensure we stay abreast of market developments and innovation. This includes regular review of financial markets and participants' activities to identify and assess possible risks to investors, market fairness, efficiency and transparency, or risks to the financial system.
This surveillance activity extends to FMA's responsibility for anti-money laundering involving financial market participants. Our annual sector risk assessments contribute to NZ Police's National Risk Assessments.
See more about anti-money laundering and countering financing of terrorism.
FMA pays particular attention to activities that sit at the edges of regulation, and activities structured to fall outside regulatory requirements. Where appropriate, we will make policy recommendations to eliminate activities that could harm investors.
Review of financial reporting by issuers
FMA runs a Financial Reporting Surveillance Programme that aims
to educate and encourage issuers to improve the quality of their
financial reporting. Good quality reporting by issuers is
fundamental to the fairness, efficiency and transparency of New
Zealand's financial markets.
Under the programme, which has been in place since 2004, FMA reviews the financial statements of selected issuers. At the end of each review, a report is published summarising the findings.
The reviews aims to ensure that:
- issuers' financial statements are clear and comprehensive
- investors can have confidence in the credibility of financial information provided by issuers
- high-quality financial reporting contributes to the integrity of New Zealand's securities markets.
FMA reviews issuers' financial statements against New Zealand Generally Accepted Accounting Practice (NZ GAAP). The Financial Reporting Act 1993 requires issuers to prepare financial statements that comply with NZ GAAP and provide a true and fair view.
The purpose of the reviews is to form a view on:
- the level of issuer compliance with NZ GAAP
- whether any breach of NZ GAAP identified requires enforcement action
- the overall quality of financial reporting practices by issuers.
FMA aims to review all issuers listed on NZX at least once
during a three-to-four-year period.
Other issuers who may be selected are dual and overseas-listed issuers, issuers trading on the Unlisted exchange, and issuers not listed on any exchange.
Issuers may be selected on the basis of criteria determined by FMA, particular risk affecting the issuer, the sector the issuer is in, or their balance dates.
As well as reviewing the financial statements, FMA reviews an issuer's annual report and, in the case of listed issuers, relevant NZX announcements and prospectuses. For listed issuers, matters relating to continuous disclosure, disclosure of relevant interests by directors and officers, and substantial security holder disclosures are followed up where necessary.
FMA is likely to write to the issuer to seek clarification or further information about any important matter that appears to be wrong, is unclear or seems irregular. We may ask the issuer to revise or enhance disclosures in future financial statements. A copy of the letter is sent to the issuer's auditor.
Where a matter may have significant market impact, FMA may treat it as an enforcement matter. Referrals may also be made to other bodies if FMA identifies a matter that breaches the Financial Reporting Act, the Rules or the Code of Ethics of the New Zealand Institute of Chartered Accountants, or NZX Listing Rules.
Review of prospectus
FMA may review a registered prospectus to determine whether it:
- complies with the Securities Act 1978 and the Securities Regulations
- contains any material incorrect descriptions or errors, or any material matter that is not clearly legible
- is false or misleading, or omits any material particular.
FMA is not obliged to review every registered prospectus, and
may choose not to review in some circumstances. FMA takes a
risk-based approach to selecting prospectuses for review.
During our review of a prospectus, FMA may contact the issuer to ask questions about its disclosure and may ask the issuer to correct or improve its prospectus.
Nothing FMA does suggests that a prospectus complies with the law or meets required disclosure standards. FMA can cancel a prospectus or prohibit allotment at any time, even if the document has undergone post-registration review.
See more about registering a prospectus.