Page last updated: 29 September 2022

Market operators

A financial product market is a facility where financial products are bought or sold, or where offers or invitations to buy or sell financial products are made. Anyone operating a financial product market needs to be licensed unless the market is exempt.

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Catalist Market Operator obligations review 2022

Findings from the FMA's review of how well Catalist is meeting its
licensed market operator obligations, for the period 21 June 2021
to 31 March 2022

View the report

In circumstances where an applicant is already authorised to operate a financial product market in an overseas jurisdiction in which its principal place of business is located, section 317 of the FMC Act specifies the criteria as to which the Minister must be satisfied before issuing a license to operate the same market in New Zealand.

On receipt of an application for a licence the FMA will review all information provided and may request further information from the applicant. The FMA must, within a reasonable time, give the application to the Minister with advice about the application. Processing time depends upon the complexities within the licence and the quality of information provided by the applicant.

Market rules and changes

Licensed markets must be operated under market rules that comply with the FMC Act as noted previously noted. A market rule, or change to a market rule, for a licensed market has no effect until it has been approved under section 331 of the Act. Following issuance of a licence (which includes initial approval of the market rules), market operators must obtain approval for any proposed market rule changes by providing an application in writing to the FMA in accordance with section 330 of the FMC Act.

On receipt of an application the approval period is 40 working days unless extended by the FMA.

For markets licensed under section 317 (overseas-regulated markets, the FMA does not approve the market rules, but the market operator must provide the FMA with the notice of market rule changes (section 334 of the FMC Act).

The Financial Markets Authority (Levies) Regulations 2012 (the Levy Regulations), as amended in 2020, 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.

Levy Classes

A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.

  • A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Levy Regulations.
  • Most notably for market operators, Schedule 2 confirms:
    • levies for market operators licensed under section 316 are split in to two types: those operating 1 or more conventional market(s) and those operating 1 or more growth market(s) fall within levy class 10.
    • operators of overseas-regulated markets fall within levy class 7.
  • The following levy classes are invoiced directly by the FMA: Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.

If the market operators provide any other financial services in New Zealand, they will need to also consider the applicable class and levies payable for those services. You should be familiar with levies and Schedule 2 of the Levy Regulations. 

 

Levy waivers

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.

How to apply for a levy to be waived

You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.

  • Name of person or entity applying for the waiver.
  • Contact person for correspondence concerning the application including address, phone number and email.
  • Indicate the persons/entity who will receive the benefit of any waiver granted.
  • Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
  • Let us know your preferred date for any waiver to take effect.
  • Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
  • Provide all relevant facts in support of your application.
  • Explain any regulatory benefit of FMA granting the waiver.
  • Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.

How to pay your waiver application fee

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:
Bank: Westpac
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*
Code: Waiver
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.

What are the fees

  • A payment of $1,265 should accompany each application.
  • This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
  • These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
  • These regulations are set by MBIE.

General obligations of licensed market operators

As a market operator, you must make sure your licensed markets operate in a fair, orderly and transparent way (s314), and have arrangements in place for the following:

  • handling conflicts between your commercial interests and fair, orderly and transparent markets
  • making market disclosures available
  • monitoring conduct on the markets
  • enforcing your market rules.

You must also ensure you have the resources required to operate your markets properly, and you are able to continue to meet any conditions of your licence.

Regulatory reporting

  • As a market operator you are required to provide the FMA with a periodic self-assessment on how well you have complied with your obligations during that period (s337). This is due within 3 months after the end of your reporting period.
  • The FMA must carry out periodic reviews of your compliance and publish our findings in a report. If we find that you are not meeting your general obligations, we can ask you to put an action plan in place.
  • As a market operator you are obliged to notify us of certain events, such as when you take disciplinary action for breaches of your market rules, or when you suspect someone may have breached the legislation. You must also give us information and assistance when we need them to carry out our regulatory role.

Download subpart 8 of part 5 of the Act to understand full details of your ongoing operational obligations.

 

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.

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:

  • provide services you are not registered for or state you are registered for a particular financial service when you are not
  • make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.

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.

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