FMA market regulator to start on May 1

The Financial Markets Authority (FMA) will open its doors on 1 May, after the bill to establish it was passed by a unanimous vote in Parliament today. 

The Financial Markets (Regulators and KiwiSaver) Bill establishes the new single market conduct regulator, which will take over the functions of the Securities Commission and Government Actuary and consolidates other regulatory functions fragmented across the Ministry of Economic Development.

It gives the FMA powers, functions, and duties that are new to the regulator.

“I’m proud that the FMA will be up and running almost a year to the day after the Government announced it would be picking up the recommendation from the Capital Market Development Taskforce,” Commerce Minister Simon Power said.

“I’m confident it will have the tools it needs to help restore mum and dad investor confidence in our financial markets, after issues were raised following the global financial crisis, and the failure of a number of finance companies.

“If we are to develop the kind of vibrant capital markets needed to lift New Zealand’s economic performance, and benefit companies looking to raise capital, our financial sector must be subject to clear rules, and visible, and proactive enforcement."

The FMA will have:

• The power to exercise an investor’s right to take civil action against a financial market participant when it’s considered to be in the public interest to do so. The bill ensures individuals can opt out of proceedings if they choose.
• The ability to use regulations to prevent products from being structured to avoid being supervised by the FMA.• Enhanced warning powers to deal with low-ball unsolicited offers. Anyone with a history of making unsolicited offers will be made to display a prominent warning to that effect when they send documents to investors. There is also a regulation-making power that will enable greater regulation of unsolicited offers, such as minimum-offer periods, disclosure of market price, and disclosure of other relevant information.
• A new oversight regime for registered exchanges, including the ability to undertake real-time surveillance of market activity.

Earlier this week, Mr Power announced the makeup of the FMA board, which will be chaired by Simon Allen.
Board members are Shelley Cave, Colin Giffney, Mary Holm, Murray Jack, James Miller, Justine Smyth, Michael Webb, and Mark Verbiest. Three associate board members are Bruce Sheppard, Rebecca Eele, and Arthur Grimes. Sean Hughes will be the chief executive.