Financial Markets Conduct Act – timeline

3 October 2013

Financial Markets Conduct Act – timeline

Introduction

The Financial Markets Conduct Act has been passed and received the assent on 13 September 2013.

This is a significant milestone for financial regulation in New Zealand.

The FMC Act rewrites many of the rules for how financial products and financial services are offered to the public and how they are governed and operated.  It will replace the Securities Act 1978, the Securities Markets Act 1988, the Unit Trusts Act 1960, the Superannuation Schemes Act 1989, and the non-tax parts of the KiwiSaver Act 2006.

Implementation timetable

The FMA has released an implementation table outlining the proposed timeline for implementation of the FMC Act – and the related repeals and amendments.  In doing so, the FMA indicated that details may change as the regulations are developed.

 

Timeline	What comes into effect?	Reference
Sept 2013	Regulation-making and FMA exemption/designation powers Minor changes to KiwiSaver scheme rules (technical corrections & payment mechanisms for first home purchase withdrawals)	FMC Act, Part 9 Financial Markets (Repeals and Amendments) Act 2013
Phase 1
1 April 2014	Preliminary provisions, including definitions	FMC Act, Part 1
	General fair dealing provisions (excluding prohibitions on unsubstantiated representations and unsolicited meetings)	FMC Act, Part 2
	Provisions to allow FMA to accept license applications (excluding the mandatory requirement to licence)	FMC Act, subparts of Part 6
	Financial reporting requirements	FMC Act, Part 7 (to be replaced by Financial Reporting Bill)
	The enforcement and liability regime (for Phase 1)	FMC Act, Part 8
	Amendments to Fair Trading Act to bring in the dual regulator regime for fair dealing	Financial Markets (Repeals and Amendments) Act 2013
	Certain disclosure exclusions (e.g. employee share schemes, prescribed intermediaries such as crowd funding, and small offers)	FMC Act, Schedule 1
	Conduct obligations for custodians (e.g. client reporting, assurance and audit etc.) in amendments to Financial Advisers Act (subject to further Cabinet decisions)	Financial Markets (Repeals and Amendments) Act 2013
	Associated transitional provisions
Phase 2
1 Dec 2014	Disclosure regime	FMC Act, Part 3
	Offer and scheme registers operational	FMC Act, Schedule 2
	Governance regime	FMC Act, Part 4
	Financial product markets regime	FMC Act, Part 5
	Requirement to be licensed and all associated conduct requirements for licensees (with some transitional exclusions)	FMC Act, Subparts of Part 6
	Remaining disclosure exclusions in Schedule 1	FMC Act, Schedule 1
	Remaining amendments to Financial Advisers Act (including DIMS[1])	Financial Markets (Repeals and Amendments) Act 2013
	Regulation of Schedule 3 schemes	FMC Act, Schedule 3
	Repeals, Schedule 4 amendments and remaining transitional provisions	Financial Markets (Repeals and Amendments) Act 2013 & FMC Act, Schedule 4

 Transition

Market participants will have up to 2 years from 1 December 2014 to comply with the new disclosure and governance requirements.  For example:

 

• New one-off issues – such as IPOs or corporate debt offers – can still be made under the Securities Act 1978 if the prospectus is registered before 1 December 2015 and the allotment completed within the 2 year transition period.

 

• Continuous issuers – such as managed funds issuers or non-bank deposit takers – will have a 2 year transition period in which they can continue to offer and allot securities under the Securities Act 1978.

 

But, new managed investment schemes must register under the FMC Act and immediately comply with the new regime.

Further information

If you would like more information about any of the matters discussed in this note, please contact me.