FMA chief executive looks forward to long-term benefits
FMA chief executive looks forward to long-term benefits of new regulation
The Financial Markets Authority (FMA) chief executive Rob Everett has told a trans-Tasman audience that it will be four to five years before New Zealand sees the full economic and business benefits of the new financial services regulatory regime.
Mr Everett was delivering a keynote address to the Banking and Financial Services Law Association (BFSLA) annual conference, in Brisbane.
He told the conference New Zealand was shifting from securities law to modern conduct regulation, following the implementation of the Financial Markets Conduct Act 2013, last year.
Mr Everett said the shift to the new regulatory arrangements was entering a new phase, following the initial round of change and the early-stage results.
The full range and depth of economic and business benefits would come following a sustained period of adaptation by the FMA, firms, professionals, and investors, lasting up to five years.
Mr Everett said that over the previous 12-18 months, improvements or progress under the new regulation included:
• the new licensing and supervision arrangements, under the FMC Act, bedding-in, following phase 2 of the Act taking effect in December 2014
• swift uptake of the new same-class offers, available under the FMC Act, with $1.2 billion raised by firms using same-class provisions
• crowd funded-equity platforms licensed and already raising $12 million dollars for projects and offers
• NZX’s new emerging firms market – NXT – licensed
• extensive constructive consultation - between firms and professionals, and the FMA - as the details of the new regulation are fine-tuned, so they work practically.
Mr Everett said that progress reflected legislation that was widely supported by financial services firms, professionals in law and audit, and political support for the arrangements.
He said emerging challenges, which the FMA is seeing now – and which require longer-term change on the part of regulated businesses and the FMA - include:
• firms embracing the full extent of cultural change - in their governance, systems, and practices - that is necessary to support conduct regulation
• the leading role for senior managers, and boards, in interpreting and implementing regulation for the businesses they run
• bringing firms that were previously unregulated, or partly-regulated, into the new arrangements, with the depth of change that is required of them
• commentators and professionals recognising that there would be fewer courtroom cases - which were a hallmark of the Securities Act - as the FMA used the wider range of non-court remedies that are available to it, including the remedies aimed at preventing things going wrong in the first place
• deepening investors’ understanding of new types of markets, including those like NXT – and, separately, new products like crowd-funded equity - which bring different types of risk relative to those that have been available in New Zealand
• re-defining the perimeter of regulation, where the FMA’s mandate stops, so that investors and firms understand what falls under regulation, and what is outside it.