Financial Markets Conduct Act

The Financial Markets Conduct Act 2013?

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.

Learn more:

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.

What is the history of the FMC Act?

In 2010 the Government introduced the first in a series of discussion documents to comprehensively review and reform New Zealand's securities law. The transition to the FMC Act was the last major step of this reform, with the final phase of the transition taking place from 1 December 2014.

The FMC Act responds to recommendations from the Capital Markets Taskforce, the effects of the global financial crisis, and the failure of finance companies.

The FMC Act was launched in two phases:

How does the FMC Act impact me?

The FMC Act impacts everyone living in New Zealand in some way, whether you are conscious of it or not. As a result of the changes brought in by the FMC Act and the big-picture vision for our country, a financially healthy New Zealand includes:

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

Specific features of the FMC Act that you can expect to see in our markets include:

  • 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.

For those who work in the financial markets industry, please visit the FMC Act compliance section of our website for specific details on how the FMC Act impacts you.

Where can I find more information?

Key documents and reports from the Government's review of securities law are available as background information on how the FMC Act was established. Further information is also available on the Ministry of Business, Innovation and Employment's website.

For those people who work in the financial markets industry, there are a range of FMA guides available that provide details on transitions and changes under the new FMC Act.

You can also contact us directly if you have any further questions.