FMA licenses 201 firms under new securities law regime

The licensing regime was part of the government's overhaul of securities law. Photo / File
The licensing regime was part of the government’s overhaul of securities law. Photo / File

The Financial markets Authority has issued 201 licenses to a variety of financial services firms in the two-and-a-half years of a new securities law regime.

Of those licensed firms, 66 were managed investment schemes, 53 discretionary investment management services, 31 were independent individual trustees and 22 were derivatives issuers, the FMA’s licensing overview report says. The regulator received 253 applications through that period, knocked back 11 with a further 41 withdrawn, typically when the FMA outlined any concerns it had.

The licensing regime was part of the government’s overhaul of securities law, with the Financial Markets Conduct Act passed in 2013 to try to revive flagging public confidence in capital markets in the immediate aftermath of the local finance sector collapse and global financial crisis.

“Licensing must be a challenge so New Zealanders can be sure licensed firms meet the standards set by law,” FMA regulation director Liam Mason said in a statement. “However, the process to get a licence should be as straightforward as possible and we have learned valuable lessons.”

The market watchdog updated its strategic risk outlook earlier this year having completed the licensing stage in December, and is preparing for another major shift in the oversight of financial advisers.

The International Monetary Fund recently completed a review of New Zealand’s financial sector regulation, which found the overall framework was well-developed but could do with some enhancements to cover areas such as custody services, which were left out of the regime when the law was under parliamentary scrutiny six years ago.

The FMA’s monitoring focus for licensed firms will be to ensure they meet their eligibility criteria, and in particular how they demonstrate customer-centric conduct. The regulator also wants firms to share what policies are and aren’t effective in meeting the terms of their licence.

– BusinessDesk

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