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About the 2004 New Zealand FSAP

The IMF conducted our last FSAP in late 2003, and published their findings and recommendations in May 2004.

The broad conclusion was that New Zealand had a profitable and well-functioning financial system, sound and transparent financial policies, and a favourable macroeconomic outlook - all of which provided an effective buffer against systemic risk.

The IMF assessed our regulatory framework as “generally appropriate” for New Zealand circumstances and indicated that (with some refinements) it would continue to provide a basis for maintaining a sound financial system.

The main recommendations made in the 2004 New Zealand FSAP are included in the RBNZ’s 2016 New Zealand FSAP Bulletin, published in late April.

However, New Zealand’s securities regulation performed relatively poorly against many of the international (IOSCO) principles. This assessment raised questions over the regulator’s core capability and effectiveness and resulted in a number of recommendations for change to improve deficiencies in New Zealand’s securities regulatory regime.

The key recommendations from the IMF’s 2004 review of securities regulation included:

  • strengthening oversight of frontline supervisors and auditors
  • allocating resources to enable a risk based review of issuer disclosure documents
  • providing for greater assessment and regulatory oversight of the NZX
  • providing a common regulatory framework, minimum standards and provisioning for the ongoing regulatory oversight of  brokers and CIS (our managed investment scheme) operators
  • providing minimum standards and strengthening oversight of market intermediaries that are not exchange members
  • providing that investment advisers should be subject to ongoing capital and prudential requirements
  • maintaining a crisis management plan for dealing with potential failure of intermediaries
  • strengthening market manipulation rules.