Financial Markets Conduct Act
The Financial Markets Conduct Act 2013 (FMC Act) governs how financial products are created, promoted and sold, and the ongoing responsibilities of those who offer, deal and trade them. It aims to facilitate capital market activity, in order to help businesses to fund growth and individuals to reach their financial goals.
The Financial Markets Conduct Bill was introduced into Parliament in October 2011 and passed into law in September 2013. The new law repeals the Securities Act 1978, Securities Markets Act 1988, and incorporates and amends a range of other related investment legislation.
The implementation of the new law has been phased as follows:
- phase 1 on 1 April 2014 comprising general fair dealing obligations, key growth-focussed initiatives including employee share schemes and enabling financial market participants to become licensed, including for crowd-funding;
- phase 2 on 1 December 2014 comprising the new disclosure requirements, go-live of the Disclose Register, licensing obligations and the remainder of the Act.
The Financial Markets Conduct Regulations 2014 have been made and are available on the New Zealand Legislation website. The regulations came into force on 1 December 2014 (together with consequential amendments to other regulations) and contain the supporting detail needed to implement phase 2, including:
- New disclosure requirements (for the new “product disclosure statement” and the Disclose Register)
- Supporting detail for the new governance and licensing obligations in the Act
- Roll over of existing regulations for financial product markets
- Details supporting the two-year transition regime in the Act.
Market participants have up to 24 months from 1 December 2014 to comply with the new disclosure and governance requirements. For example:
- Continuous issuers – such as managed funds issuers or non-bank deposit takers – have a two year transition period in which they can continue to offer and allot securities under the Securities Act 1978.
- New one-off issues – such as initial public offerings or corporate debt offers – can still be made under the Securities Act 1978 if the prospectus is registered before December 2015 and the allotment completed within the two year transition period.
- But, new KiwiSaver schemes and superannuation schemes must register under the FMC Act and immediately comply with the new regime.
- Existing providers of discretionary investment management services have until December 2015 to be licensed (but must have put in a licensing application or have updated their adviser business statement by 1 June 2015).
- There is transitional relief for licensed derivatives issuers of between six and 12 months from new disclosure, financial adviser, and client funds handling requirements (with some additional short-term relief while licence applications received before December 2014 are being processed).
- A prescribed period has been provided to allow old “wholesale offers” exemptions to be relied on for a further six months.
- Unlicensed financial product markets need not be licensed until 1 December 2015.
Further information about FMC Act implementation and transition is provided by the Financial Markets Authority.
Following the passing of the FMC Act, MBIE began a five year evaluation of its effectiveness. The purpose of the evaluation is to assess whether a number of short and medium term policy outcomes of the FMC Act have been achieved. MBIE’s framework and methodology for the evaluation is set out in the Financial Markets Conduct Act – Baseline report and evaluation plan [PDF 559KB].
Progress to date
Offers and schemes now registered on the Disclose Register
As of 1 December 2016, issuers of financial products and managed investment schemes operate under the FMC Act.
Offers and schemes are now registered on the Disclose Register.
Visit the Disclose Register.
Financial Markets Conduct Regulations in force
The FMC Regulations were made on 3 November 2014 and came into force on 1 December 2014.
Decisions on Discretionary Investment Management regulations
In June 2014 the Minister announced further decisions on the regulation of discretionary investment management services (DIMS) under both the Financial Markets Conduct Act 2013 and the Financial Advisers Act 2008.
These decisions included measures to make the regulatory regime more accessible for smaller DIMS providers and transitional arrangements for existing providers.
The full Financial Markets Conduct Regulations (FMC Regulations) were made on 3 November 2014 and came into force on 1 December 2014.
The Financial Markets Conduct Bill (FMC Bill) was introduced into Parliament on 12 October 2011, and was reported back from select committee on 7 September 2012. A supplementary order paper containing further changes to the Bill was released on 22 April 2013.
An exposure draft of the Financial Markets Conduct Bill was released in August 2011, with a request for submissions on the technical detail prior to the draft Bill being finalised and introduced to Parliament. The Ministry received 73 submissions on the Bill.
On 22 June 2010 the former Ministry of Economic Development released a discussion paper on the review of securities law. 98 submissions were received, which formed the basis for ongoing consultation and the development of recommendations to Ministers.