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Financial Markets Conduct Act

Page last updated: 21 Feb 2019

The Financial Markets Conduct Act 2013 (FMC Act) lays the groundwork for us to provide high-quality regulation in capital markets and financial services here in New Zealand. It is the largest statutory change in our financial markets in at least 30 years and ensures regulation keeps pace with investor and business expectations.

The FMC Act gives us a much bigger mandate in our role as conduct regulator and brings extensive new responsibilities in licensing, supervision and enforcement. As a result of this changing landscape, everyday New Zealanders can expect to experience the facilitation and promotion of fair, efficient and transparent financial markets.

What is the FMC 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.

History of the FMC Act

How the FMC Act affects you

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

Features of the FMC Act

  • 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.

What the FMC Act governs (amongst other things)

  • 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.