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WHO IS THE FINANCIAL MARKETS AUTHORITY?

A recent survey by the Financial Markets Authority (FMA) showed that 61% of New Zealanders had not heard of them. 

The FMA is an independent Crown entity in charge of ensuring public confidence in our financial markets and supporting the growth of our capital base in New Zealand. 

The FMA is one of three main regulatory bodies working to regulate our economy together with the Reserve Bank of New Zealand and the Commerce Commission. The FMA regulates financial product providers including KiwiSaver providers and superannuation schemes, intermediaries (e.g. financial advisers), qualifying financial entities, issuers, and those who monitor financial providers (e.g. auditors and statutory supervisors). 

The functions of the FMA include monitoring and supervising conduct in the market and investigating where there are potential financial harms to the market. The FMA website provides policy, guidance notes to assist firms and professionals to comply with the law and educational tools to help investors make better investment decisions. 

One enactment the FMA ensures compliance with is the Financial Markets Conduct Act 2013 ("FMC Act"). The FMC Act regulates persons offering, reporting or governing financial products and dealing in financial products from a financial product market (e.g. the NZX market). 

Under the FMC Act financial products are categorised into four distinct categories: 

  • Debt securities;
  • Equity securities;
  • Managed investment products; and
  • Derivatives. 

The FMC Act also provides a regime for licensed providers of discretionary investment management services or DIMS. 

Recently, Milford Asset Management Limited ("Milford") settled $1.5 million with the FMA over certain trading conduct of a portfolio manager at Milford, which received considerable media coverage. The settlement serves as a timely reminder that the FMA is out there investigating alleged false or misleading conduct in our financial markets. 

Under the FMC Act there are large penalties for persons who contravene or are involved in the contravention of the FMC Act. If you are a person looking at offering financial products or have issued financial products in the past it is imperative that you understand your obligations under the FMC Act. 

For further information about the Financial Markets Authority click here

 

 

Written by James Moran at 11:00

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