New Zealand Financial Markets Conduct Bill1 September 2011
On 9 August 2011 the New Zealand Ministry of Economic Development (MED) issued the draft Financial Markets Conduct Bill. In his press release the Commerce Minister, Simon Power, described the bill as a “once-in-a-generation opportunity to re-write our securities law”. Submissions on the proposed legislation are due to the MED by 6 September 2011, and the Minister intends to introduce the bill to Parliament before the next general election on 26 November 2011.
For the first time in the history of the managed funds industry in New Zealand, all managed investment schemes (“schemes”) will be covered by the same legislation, and must comply with a common set of substantive requirements. The Bill represents a significant reform of the disclosure and governance regimes for schemes in New Zealand, including KiwiSaver, as it replaces five existing laws, and amends a further six.
The recently created Financial Markets Authority (FMA) will be central to the new regulatory regime for schemes, as all schemes will be registered by the FMA, and all scheme participants (e.g. fund manager, supervisor, custodian ) will be licensed by the FMA. The Bill also defines the role of the manager, including the manager’s duties owed to scheme participants and specific obligations that apply in managing the scheme.
In light of the recent Global Financial Crisis, the implementation of a single regulatory regime and policing entity for all schemes should provide better protection for NZ investors.
Whilst the operational impacts of this new legislation will be significant, the impact to registry and investment management platforms should be relatively minor.
Have you assessed the impact of this proposed legislation to your business, and are there any significant points you would like to suggest for inclusion in submissions to the MED?