The Financial Markets Conduct Act 2013 (FMC Act) was enacted on 13 September, a little over three years since the initial discussion document was released on a new securities law framework. The FMC Act represents the most sweeping reform of New Zealand's securities laws in several decades and is a culmination of a considerable law reform initiative by law makers, officials, market participants, and the legal community.
Prior to its passage some final amendments were made to the Financial Markets Conduct Bill under a Supplementary Order Paper. For details of those amendments see our earlier client update here. The Bill was also divided into two separate bills just prior to being passed. The Financial Markets (Repeals and Amendments) Act 2013 (FMRA Act) contains provisions that were previously in Part 9 and Schedule 4 of the Bill relating to the repeal of the existing legislation. It also amends other financial markets legislation including the Financial Advisers Act 2008, Financial Service Providers (Registration and Dispute Resolution) Act 2008, Securities Trustees and Statutory Supervisors Act 2011 (which will be renamed the Financial Markets Supervisors Act) and the Financial Markets Authority Act 2011.
Further consultations planned before implementation
The implementation of the FMC Act is dependent on a substantial body of regulations which are still to be finalised (the FMC Regulations). An exposure draft of the FMC Regulations is expected to be released for consultation in October.
FMA has also announced that it will be engaging on the following aspects of the regime prior to April 2014:
Click here to view table.
For further details refer to FMA's "The Future of Financial Markets" publication here.
Proposed timeline for changes
Following the enactment of the FMC Act the regulation and FMA exemption/designation powers were bought into effect. Minor technical changes were also made to the regulations relating to default KiwiSaver providers and the KiwiSaver scheme rules. The remainder of the FMC Act and the FMC regulations will be implemented in two phases (but this may change as the regulations are developed).
Phase 1 – 1 April 2014
In Phase 1 of the implementation timetable provided by the FMA the provisions of the FMC Act outlined in the table below will come into effect on 1 April 2014. The regulations which relate to these Phase 1 provisions will be made in February 2014.
Click here to view table.
Phase 2 – 1 December 2014
The remaining provisions of the FMC Act and the FMRA Act will come into effect on 1 December 2014. The regulations which relate to these Phase 2 provisions will be made in July 2014.
For further details see the implementation timetable for the Financial Markets Conduct Act on the FMA's website here.
The FMC Act provides for transitional arrangements for various market participants and financial products, including the following:
- Continuous issuers have been given until 1 December 2016 to comply with the new disclosure and governance requirements and will be able to continue to offer and allot securities under the Securities Act over that period.
- Issues of securities can continue to be made under (and be governed by) the Securities Act if the prospectus is registered before 1 December 2015 and the allotment of those securities is completed by 1 December 2016.
- Existing registered exchanges and authorised futures exchanges will be treated as holding a financial product market licence in respect of each of their current markets, and a process is set out to enable currently unlicensed markets to seek a licence under the transitional provisions.
Further details and guidance will become available on what the timeline for change means for different groups of market participants as the FMC Regulations are developed.