Friday 28th November 2014
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Financial Markets Authority chief executive Rob Everett expects sweeping changes to securities law will change the landscape for the sector by putting more emphasis on the investing public.
The second phase of the Financial Markets Conduct Act comes into effect on Monday extending licensing provisions to several hundred more businesses and requiring more concise and clearer disclosure documents for financial products and introducing an online register for material information on offers covered by the law, the FMA said in a statement.
"The thing that attracted me most about the Financial Markets Conduct Act when I considered the role at the FMA is I think it puts the lens back to investors and users of financial services," Everett told BusinessDesk. "That's a very healthy way to be moving."
The second phase of the legislation is the culmination of work dating back to the 2008 Capital Markets Development Taskforce, and overhauls decades old legislation with an aim of reinvigorating public confidence in the capital markets by making investment documents easier to understand, and tightening up rules for the regime governing the industry.
Everett said the shift in market behaviour will be a long term one, but will force company boards and executives to re-think how they present their businesses, and he was pleased with the willingness of directors to adopt the new rules.
"It will really challenge boards to look at these things with an eye for a user," he said. "I do suspect some boards will need to think through the blend of people they've got in the room and think how do we help ourselves approach this from the right angle."
The regulator held extensive consultation with the industry to prepare for the changeover that will bring more than 11,000 firms, professionals, registered schemes and funds under the FMA's mandate. Everett said the new regime will mean operators who might not otherwise have come to the regulator's attention will have to be licensed if they want to continue.
"That will give us a much better sense of who's out there doing this stuff than I think will have been possible before," Everett said. "We feel we've had a good response from the industry in terms of willingness to engage with us."
The FMA will monitor the use of the online register for documents to see whether it can or should expand the concept of having a central base for financial services information.
"In so many jurisdictions it is in fact quite hard to get hold of material unless you're in the industry and it shouldn't be like that," Everett said. "The register, particularly if it expands in terms of what we put on it over time, which will depend on how used it gets, is certainly a step forward."
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