The second phase of New Zealand’s new capital markets and financial services law took effect from December 1 2014. Phase two of the Financial Markets Conduct Act 2013 (FMC Act) includes licensing provisions that extend to several hundred further businesses and a major shift in the quality of investor disclosure for financial products. It largely completes the regulatory overhaul that began with the Capital Market Development Taskforce’s final report in 2009.

In addition to the FMC Act’s focus on licensing and conduct, the overhaul also included an expanded prudential role for the reserve bank, covering banks, insurers and non-bank deposit takers.

Features of phase two of the FMC Act include two specific measures. Firstly, subjecting product disclosure statements for financial products – including debt and equity – to page limits. Secondly, the licensing of managers of registered schemes (managed investment schemes), derivatives issuers, independent trustees of restricted schemes and providers of discretionary investment management services.

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 Financial Markets Authority’s mandate.

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