Financial Markets Conduct Act

The purpose of the FMC Act is to promote and facilitate the development of fair, efficient and transparent financial markets, and to promote the confident and informed participation of businesses, investors and consumers.

The FMC Act works to reform the regulation of financial conduct. It governs the way financial products are offered, promoted, issued and sold. This includes the on-going responsibilities of those who offer, issue, manage, supervise, deal in and trade financial products. The FMC Act also regulates the provision of certain financial services.

The changes introduced by the new legislation play a key role in building confidence in our markets, by providing better information for investors, as well as setting clearer rules for companies wanting to raise capital.

In 2010 the Government introduced the first in a series of discussion documents to comprehensively review and reform New Zealand's securities law. The transition to the FMC Act was the last major step of this reform, with the final phase of the transition taking place from 1 December 2014.

The FMC Act responds to recommendations from the Capital Markets Taskforce, the effects of the global financial crisis, and the failure of finance companies.

The FMC Act was launched in two phases:

• Phase one: New Zealand financial markets enter new era (1 April 2014)
• Phase two: Financial markets law completes long-term overhaul (1 December 2014)

The FMC Act impacts everyone living in New Zealand in some way, whether you are conscious of it or not. As a result of the changes brought in by the FMC Act and the big-picture vision for our country, a financially healthy New Zealand includes:

• Well-informed investors and consumers
• Healthy and robust businesses
• Competitive markets
• Good conduct by businesses and professionals
• Global recognition as a strong business environment.

• A fair dealing requirement covering all firms or professionals that are dealing in or supplying financial products or financial services.
• A more proportionate liability regime - relative to that under existing securities laws - applying to directors of firms making offers or providing financial products under the FMC Act.
• More concise and timely financial reporting. About 2,300 firms and schemes are reporting financial information under the FMC Act, and are subject to regulatory oversight by the FMA.
• Providers in two new categories - peer-to-peer lending and equity crowd funding - licensed by the FMA. Providers are now offering both services.
• The NZX’s proposed stepping-stone market for emerging firms (‘NXT’), registered as a market.
• Issuers using the exemptions providing streamlined processes for ‘same class’ offers, making it easier to raise further capital.
• 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.
• 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.
• Several hundred organisations and individuals are expected to apply for licences over the next two years, bringing more than 11,000 firms, professionals, registered schemes, and funds under the FMA’s mandate.

For those who work in the financial markets industry, please visit the FMC Act compliance section of our website for specific details on how the FMC Act impacts you.

• offers of financial products
• directors’ responsibilities in making public offers for financial products
• mandatory disclosure to investors for offers of financial products
• on-market dealing, including on the public exchange
• financial reporting
• Licensing of firms and professionals.