Supplementary Financial Markets
Conduct Regulations
Provisions & Questions for Feedback
Submissions process
The Ministry of Business, Innovation and Employment (MBIE) seeks written submissions on the exposure
draft of the supplementary Financial Markets Conduct (FMC) Regulations by 5pm on 2 July 2015.
Please use the submission template provided below as this will help us to collate submissions and ensure
that your views are fully considered. Please also include your name, or the name of your organisation, and
contact details.
You can make your submission by attaching your submission as a Microsoft Word attachment and sending
it to [email protected]. Please direct any questions that you have in relation to the submissions
process to: [email protected].
Use of information
The information provided in submissions will be used to inform MBIE’s policy development process and to
refine and improve the amendment regulations. We may contact submitters directly if we require
clarification of any matters in submissions.
Please note that we intend to upload PDF copies of submissions received to MBIE’s website at
www.mbie.govt.nz.
Confidential information
If your submission contains any confidential information and you are requesting it to not be published on
our website, please clearly state which information is confidential and the reasons for it. Any confidential
information should be clearly marked within the text.
If you wish to provide a submission containing confidential information, please provide a separate version
excluding the relevant information for publication on our website.
Should MBIE receive a request for a copy of submissions under the Official Information Act 1982 (the OIA),
MBIE will need to make its own assessment of whether there are grounds under the OIA to withhold
information that is requested to be treated as confidential. In this event, MBIE will endeavour to consult
with submitters that have provided confidential information before making a decision on the request.
Private information
The Privacy Act 1993 establishes certain principles with respect to the collection, use and disclosure of
information about individuals by various agencies, including MBIE. Any personal information you supply to
MBIE in the course of making a submission will only be used for the purpose of assisting in the
development of policy advice in relation to this review.
Explanation of this questionnaire
The first section of the questionnaire takes the form of changes to the affected Financial Markets Conduct
(FMC) regulations being grouped according to issue. The questionnaire is to be used for providing feedback
on any technical issues with the regulations which will mean the regulations do not achieve the desired
effect or may have unintended consequences. Due to the many regulations, please submit only on those
that you wish to provide comment.
The second section of the questionnaire is to be used for providing feedback on the alternative PDS, and
the third section is for feedback on particular policy issues.
Submission form
Please answer the following questions to help with our analysis of comments received from submitters.
Please provide your name and/or the name of
the group of people, business, or organisation
you are providing this submission on behalf of:
Please provide your contact details:
OM Financial Limited
c/o Brent Weenink, Operational Risk and Compliance Manager,
OM Financial Limited,
187 Broadway, Newmarket, Auckland
Email: [email protected]
Section one: feedback on technical issues with the regulations
Exposure draft
regulation
reference
Definition changes
Reg 4
FMC Regulations
affected
Reg 5, def of retail
investor
Reg 5, def of
unique identifying
information
Reg 5, def of
disclosure year
Response
-
-
-
Disclosure of offeror details for sale offers
Reg 6
Reg 12
Offers by listed issuers of products that rank equally or above quoted products (ie, “simplified disclosure”)
Reg 7, 8, 9, 11, 12
Reg 20, 22, 23, new
and 17
regs 42A, 49E to
49G, and 54A (and
see changes to
Exposure draft
regulation
reference
FMC Regulations
affected
Schedules below)
Offers of convertible products
Reg 12
New reg 49A to
49D (and see
changes to
Schedules below)
Changes to confirmation notice provisions
Reg 14
New regs 52 to 52B
Response
-
Defined benefit schemes
Reg 15 and 18(3)
Regs 53 and 56
Fund updates for multi-funds investment options
Reg 18 to 20
Regs 56 to 58A
-
Allowing use of fund updates to supplement PDS
Reg 21, 35(4), (5),
New reg 61A and
(25)
new clause 8A of
Sch 4
Ongoing client reporting for derivatives
Reg 22
New reg 71A to 71C Can information be “provided” merely by making it available to the investor via an electronic platform, requiring the investor
to “logon” in order to access the information (rather than being transmitted to the investor’s email address from a platform)?
We would prefer to add the words “or made available” after “provided” in reg 71C to make that clearer.
Further, for clarity, we suggest reg. 71C be amended by adding the words “on a substantially continuous basis” to be
consistent with reg. 68 (1)(a).
Register audits
Reg 23
Reg 109
Circumstances in which independent custodian requirements do not apply
Reg 24
New reg 237A
Exposure draft
regulation
reference
FMC Regulations
affected
Response
Derivatives investor money and property obligations
Regs 25 to 29
Regs 242, 244 to
Reg. 244(1): We consider there should be some control or minimum threshold requirements before derivatives issuers can
244B and 246
elect a cash-based reconciliation under reg. 244(1). As it stands an “undercapitalised” unlicensed issuer (say, offshore or
wholesale client focused) could disguise it’s under-capitalisation by electing a cash-based reconciliation and not recognising
unrealised losses.
We accordingly suggest that cash-based reconciliations be restricted to licensed issuers, or by approval of the regulator.
Mutual recognition – pre-offer advertising
Reg 30
Reg 264
Notices given by the FMA
Reg 32
New regs 280A and
280B
-
Debt securities – Schedule 2
Reg 33
Sch 2: new cl 1(4)
Sch 2: cls 6, 9, 11,
15, 30, 48
Sch 2: cl 23
Sch 2: cls 37, 39
Sch 2: new Part 1A,
cls 63, 64, 65
Sch 2: cl 67
Equity securities – Schedule 3
Reg 34
Sch 3: cls 5, 8, 10,
32
Sch 3: cls 35 and 39
-
-
-
Exposure draft
regulation
reference
FMC Regulations
affected
Response
Sch 3: new Part 1A,
cl 52, 53
Sch 3: cl 52
-
Sch 3: cl 53
-
Sch 3: cl 55
-
Managed funds – Schedule 4
Reg 35
Sch 4: New cl 8A, cl
12, 63
Sch 4: New cl 8B
Sch 4: cl 51
Sch 4: New cl 8C, cl
53A
Sch 4: cl 54
-
Sch 4: cl 55
Sch 4: cl 55
Sch 4: cl 58, 59
Sch 4: cl 62
Sch 4: New cl 8A, cl
12, 63
Sch 4: New cl 8B
Sch 4: cl 51
-
Sch 4: New cl 8C, cl 53A
Other managed investment schemes – Schedule 5
Exposure draft
regulation
reference
Reg 36
FMC Regulations
affected
Response
Sch 5: cl 4, 7, 8, 24
-
Limited disclosure requirements - Schedule 8
Reg 38
Sch 8: cl 21
Sch 8: cl 23, 29, 32
-
Sch 8: cl 26 and 31
Sch 8: cl 40A
Bank and Crown LDD - schedule 9
Reg 39
Sch 9: cls 1, 5, 8, 10,
13, 24, 33
DIMS - schedule 21
Reg 40
Sch 21: cl 27
Sch 21: cl 37
Exposure draft
regulation
Reference
Reg 4
FA Custodians
Regulation
affected
Reg 3
Reg 5
Reg 11
Exposure draft
regulation
Reference
Reg 4
FA Exemption
Regulation
affected
Reg 13
Reg 4
Reg 14
-
-
-
-
-
Section two: feedback on the alternative PDS concept
Question
Do you think the alternative structure would
be useful or beneficial to fund providers? What
benefits (if any) does it have over the usual
managed fund PDS structure?
Response
-
In what circumstances would you envisage the
alternative structure being used?
-
How likely are you to use the alternative
structure?
-
Are there any improvements you would
suggest to its design?
-
Section three: feedback on policy issues
Question
Should there be ongoing disclosure
requirements for:
 unquoted mandatory convertible
products?
 other delisted issuers?
Are there significant benefits in extending the
“same class” exclusion in Schedule 1 to cover
options by way of issue? Or would this result in
less useful information being available to
investors?
Are there significant benefits to unlisted
issuers in removing elements of the PDS
disclosure for offers to existing product
holders?
Should the requirement to include “all other
material information” on the register entry be
removed to the extent that the information
has already been disclosed in annual reports
and other such documents?
Are there practical problems with using the
usual PDS disclosure for options by way of
issue that the regulations should address?
Other Comments
Response
-
-
-
-
-