1. Compliance
  2. Market operators
  3. Who needs to comply
hero blue bg

Market operators

Who needs to comply

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. S309 of the Financial Markets Conduct Act (the Act) sets out what is considered a financial product market and what is not.

Anyone operating a financial product market must be licensed unless the market is exempt. Exemptions may apply if fewer than 100 transactions occur in a financial year, or if the value of products traded in a financial year is less than $2 million. The full list of exemption conditions is found in s312 of the Act.

When a licence may be issued

The Minister of Commerce and Consumer Affairs issues financial product market licences, with advice from us. The Minister and the FMA must consider the following before issuing a licence to a financial product market operator:

  • the nature of the activities proposed 
  • the market’s proposed size
  • the nature of the financial products dealt with
  • the likely participants (either directly or by using the services of participants) and
  • the technology used in operating the market.

The Minister must also be satisfied that an applicant will be able to meet the general obligations of licensed market operators, found in s314 of the Act. The applicant also needs to be registered on the Financial Service Providers Register (FSPR).

Licence conditions

A licence may cover more than one financial product market. It is subject to conditions about clearing and settlement arrangements, arrangements for enforcing breaches of market rules, and any other conditions the Minister imposes.

The market operator can subsequently request changes to the conditions of the licence, or the Minister may vary the conditions on his or her own initiative.

A licence may also be suspended or cancelled under certain circumstances, set out in s323 of the Act.

Full details of the legislative requirements and obligations relating to financial product market licences are found in subpart 7 of part 5 of the Act. You should also check whether you need to comply with other parts of the Act. For example, a licensed market operator is an FMC reporting entity and must comply with part 7.

For information on applying for a financial product market licence, click here.

 

Find out more about: