A derivatives issuer that makes a regulated offer of derivatives must be licensed by the FMA. This page contains information about derivatives, obligations for derivatives issuers, and who needs to comply.
Under the FMC Act, you must be licensed to make a regulated offer of derivatives. See section 388 of the FMC Act. A derivatives issuer that makes a regulated offer of derivatives must be licensed by the FMA. See section 41 of the FMC Act. A regulated offer means an offer of financial products, including derivatives to one or more investors where at least one of those investors requires disclosure, for example, because the investor is a retail investor.
Please contact us to get a copy of a licence application by emailing [email protected].
The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020 and 2022, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).
The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.
A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.
The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
|1||Persons making an application for registration on the Financial Service Providers Register|
|2||Registered banks and licensed non-bank deposit takers|
|2A||Registered banks and licensed non-bank deposit takers that are required to hold a conduct licence|
|3A||Licensed insurers that are required to hold a conduct licence|
|4||Licensed supervisors of debt securities and managed investment products in registered schemes|
|5||Managers (of registered schemes)|
|6||Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers|
|6A||Licensed discretionary investment management service (DIMS) retail providers|
|6B||Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C|
|6C||Custodians and persons providing custodial services|
|6D||Crowdfunding service providers and peer-to-peer lending service providers|
|6E||Licensed financial benchmark administrators|
|6H||Licensed financial advice providers|
|7||All other financial service providers that are not included in any of classes 2 – 6H|
|8||Listed issuers (other than persons included in class 8A)|
|8A||Small listed issuers|
|9||Lodgement of a product disclosure statement (PDS)|
|10||Licensed market operators|
|10A||Licensed market operators that operate growth markets (other than persons included in class 10)|
|11||FMC reporting entities that lodge financial statements (or group financial statements) and auditor’s reports|
|13||Licensed overseas auditors|
|14||Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008|
|15||Persons that are registered or incorporated and required to make annual returns under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008|
|16||Climate reporting entities|
It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.
Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:
These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.
It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.
We have discretionary power to waive a levy (in whole or part).
We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.
The waiver power is not intended to be used to revisit settled policy positions.
Once we receive a waiver application and the fee, we will assess it. If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.
Email the following information to [email protected]:
You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.
The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.
We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.
|Payment option||How to pay||Additional information|
|Electronic deposit or internet banking||Where bill pay is available please select ‘Financial Markets Authority - Other'
Otherwise, our bank details are:
Account name: Financial Markets Authority
Account number: 03-0584-0198005-000
|To ensure we process your payment correctly please provide the following information:
Particulars: Payer’s name*
Reference: Applicant’s name
You do not need to forward a hard copy of your application if paying electronically
* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.
The FMA has wide powers to exempt persons or transactions from some financial markets law requirements. These powers enable us to remove rigidities in the law and ensure requirements for businesses are reasonable and cost-effective. Find out more about exemptions you can apply for under the FMC Act and current exemption notices.
A derivatives issuer that makes a regulated offer of derivatives must be licensed by the FMA. A regulated offer means an offer of financial products to one or more investors where at least one of those investors requires disclosure, for example because the investor is a retail investor. SeeA derivatives issuer is required to be licensed when making a regulated offer. A regulated offer includes any offer of derivatives when disclosure must be made to one or more investors. For example, a retail investor. See section 41 of the FMC Act.
A derivatives issuer licence is subject to:
When issuing derivatives under a regulated offer, a derivatives issuer must ensure that there is a client agreement governing that service. The client agreement must be:
Regulation 225 of the Financial Markets Conduct Regulations 2014 (FMC Regs) contains certain provisions that are treated as being implied into all client agreements.
Information about regulated offers of derivatives must be disclosed in a product disclosure statement (PDS) and on the Disclose Register. Together, this information must include all material information about the offer of the derivative and be up to date, accurate and understandable. The purpose of the information is to assist investors with their investment decisions.
Schedule 1 of the FMC Act sets out a series of statutory exclusions where lighter compliance paths are appropriate. Depending on the exclusion, limited or no disclosure may be required.
The FMA offers a pre-registration review service to help issuers and their directors feel more confident that their offer documents are likely to satisfy our expectations.
Licensed derivatives issuers are required to comply with the requirements contained in the FMC Regs for the handling of derivatives investor money and derivatives investor property. These include:
Licensees’ obligations include notifying the FMA of certain events and providing us with information. For example, section 412 of the FMC Act require a derivatives issuer to report various matters to the FMA as soon as practicable, including any breach (or likely breach) of its market services licensee obligations and any other material change of circumstance.
Licensed derivative issuers are FMC reporting entities and must comply with all of the following:
All licensed derivatives issuers are required to complete and submit an annual regulatory return. The return is a series of questions about your business and how your licensed service is used.
Licensees are required to complete an annual regulatory return for the 12-month period ending 30 June and submit it to the FMA by 30 September of that year.
The information you provide us through the annual return helps us to:
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) imposes several obligations:
The FMC Act sets out minimum compliance standards of behaviour for people operating in the financial markets. It prohibits:
Please contact us to report misconduct, make a complaint or give us a ‘tip-off’.
Licensees are subject to supervision by us. We take a risk-based approach to monitoring, meaning the extent of supervision varies depending on our priorities and the nature of your business. From time to time we also conduct sector risk assessments to obtain information that assists us in our risk-based monitoring approach. Monitoring can range from a full onsite inspection through to information requests and desk-based reviews. As a minimum, we will seek assurance you are complying with the basics, ie:
We will also assess your conduct generally as a licence holder and check you are complying with key legislation such as the Financial Advisers Act 2008, the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and the fair dealing provisions within the FMC Act.
A feature of the FMC Act is the use of preventative regulation, which aims to identify and anticipate potential causes of harm to New Zealand’s financial markets and investors. Find out more in our Strategic Risk Outlook.
A key part of our supervision is self-reporting by licensees. If we can see that you can identify and resolve problems it gives us confidence. If you have any significant issues, we encourage you to tell us about them and what you are doing to remedy them.
In addition, we review your two assurance reports, which you are required to submit as part of your reporting requirements (via [email protected]). These two reports are:
If you need to contact us at any time during the term of your licence you should email [email protected].