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New rules for financial markets to take effect

Paul Goldsmith
28 November, 2014

Commerce and Consumer Affairs Minister Paul Goldsmith welcomes new rules taking effect from 1 December which will promote the growth of New Zealand’s financial markets and boost investor confidence.

“I am pleased to announce the final stage of implementation of the Financial Markets Conduct Act 2013 which starts to come into force on 1 December,” says Mr Goldsmith.

“The National Government wants financial markets to be supported by clear, predictable rules that enable investors to make confident judgements about the risks and returns from investment decisions.

“In 2008 the Capital Markets Development Taskforce report found that existing financial markets legislation did not adequately promote investor confidence or provide a clear, predictable environment for businesses.

“As a result, we made changes to our laws to improve the quality of disclosure to investors, strengthen the governance of financial products, and enable more innovative and flexible methods of capital raising.

“This represents the culmination of an overhaul of the laws that govern our financial markets.

“We have consulted extensively to produce a regime that will significantly enhance the performance of our capital markets. Businesses will find it easier to raise the capital they need to grow and there will be more investment opportunities in New Zealand.

“I thank all those who worked to help shape this important piece of legislation,” Mr Goldsmith says.

The new law covers:

  • A consumer focussed disclosure regime, which is world-leading in its use of an online register for offers of financial products.
  • New governance rules relating to managed investment schemes such as KiwiSaver. These will allow investors to make investment decisions according to the performance and risks of a financial product whilst being assured that basic governance standards are in place.
  • Licensing obligations for certain financial markets participants will begin to apply from today, bringing New Zealand into line with other international regulatory regimes.
  • Improved disclosure and reporting obligations will be provided to investors by services who manage portfolios on their behalf.

These changes are in addition to those implemented under Phase 1 on 1 April 2014.

“The reforms are a significant part of the Government’s Business Growth Agenda to restore confidence in our financial markets and allow firms to raise capital efficiently so they can grow their business and the economy,” Mr Goldsmith says.

For more information visit http://www.fma.govt.nz/keep-updated/the-future-of-financial-markets/