FMA consultation - standard conditions for derivatives issuer licences
The FMA has released a proposal for consultation to impose a new standard condition and amend an existing standard condition for all derivatives issuer (“DI”) licences. All licensed DIs operating in New Zealand must comply with the standard conditions imposed by the FMA on their licences.
The proposed changes include:
- A new standard condition 14, which will align DIs with leverage limits in other jurisdictions.
- Revision of existing standard condition 12 to require a consistent assessment of the suitability of a derivative for a retail investor before the investor enters into the derivative.
Consultation closes on August 7, 2024. A link to the consultation paper can be found on the FMA’s website here.
Proposed guidance on references to climate statements in disclosure documents
The FMA has released proposed guidance on references to climate statements in disclosure documents for consultation. The guidance pertains to the following disclosure documents:
- Any current or new Product Disclosure Statement (“PDS”) for financial products
- The Other Material Information (“OMI”) on the offer register on Disclose for financial products
- Any Statement of Investment Policies and Objectives (“SIPO”) on the offer register on Disclose
- Any annual report
The guidance supports the climate-related disclosures (“CDR”) regime, which includes the requirements outlined in Part 7A of the FMC Act and the CDR framework, including Aotearoa New Zealand Climate Standards NZ CS 1, NZ CS 2, and NZ CS 3.
Consultation closes on August 30, 2024. After this, submissions will be reviewed and the information sheet will be updated.
A link to the consultation can be found on the FMA website here.
FMA guidance note – providers of client money or property services
The FMA has published guidance on how providers of client money or property services, and custodians, can meet their obligations under the Financial Markets Conduct Act 2012 (FMC Act).
The guidance replaces the FMA's 2014 guidance note for brokers and the information sheet on custodians' obligations to align with the new regulatory regime. It also provides additional guidance for custodians who have specific obligations beyond those that apply to all client money and property service providers.
Key takeaways from the updated guidance include:
- The FMA's view on how custody reporting should be provided directly to the client, rather than via a financial adviser or other intermediary in the transactional chain.
- The FMA's perspective that if reporting is provided via an electronic platform, the platform should be the custodian's own, or have appropriate systems and controls to ensure reports and information cannot be altered by the platform provider or others in the transactional chain.
- The steps providers and custodians can take to verify a client’s electronic address.
- Confirmation that the client money and property rules do not apply to a 'broker' as defined under the Insurance Intermediaries Act 1994. In the FMA’s view, a non-IIA broker is not considered to be providing a client money or property service.
