Most Read Contributor in New Zealand, September 2016
The Securities Law Review is now in the final phases with the
release today of the
exposure draft of the Financial Markets Conduct
Bill for public consultation.
The review has always been of epic scale and has stayed true to
that tradition. The initial
discussion document, released mid last year, ran to 200 pages.
The draft Bill is more than twice that length. In between, there
have been two hefty Cabinet papers in
The submission deadline is 6 September,
with the Ministry of Economic Development
(MED) encouraging earlier responses. This is
relatively tight, given the sheer volume of the documentation - but
there will be an opportunity to submit on the Bill itself in early
2012, once referred to Select Committee.
Chapman Tripp has followed the review closely throughout and
will be producing detailed commentaries on key aspects of the draft
Bill over the next few days. This Brief Counsel seeks to
provide you with a wide angle overview of the Bill and to assist
you to navigate the detail. We also provide links to our
previous Brief Counsels.
The Bill is the centre-piece in what Commerce Minister Simon
Power has described as a "once in a generation" reform of
capital markets regulation and introduces some fundamental changes
in regulatory design.
Key among these is:
a shift to regulating products according to their economic
substance rather than – as now – their legal
form, with capacity for the Financial Markets Authority
(FMA) to allocate a product to a category
a shift from regulating only those securities offered to the
public to a system in which all offerings are regulated unless they
are specifically exempt
a single product disclosure statement (PDS) to replace
the prospectus and investment statement
simplified securities advertising rules
creation of a collective investment scheme regime under which
all schemes must comply with a common set of substantive
a generic licensing framework for certain financial market
participants, including derivative issuers, fund managers and
financial product market operators
wider regulation of financial product exchanges with
flexibility around the rules to accommodate different markets and
to encourage the development of a 'stepping stone' exchange
for smaller companies
civil liability and sanctions focused on compensation for loss,
rather than strict liability offences
infringement notices for lesser breaches, and
criminal liability for egregious breaches of directors'
duties to act in good faith and in the best interests of the
company and in relation to reckless trading.
Road map to Bill
MED has published a
commentary highlighting areas for submission and providing
a road map to the Bill, identifying which sections deal with each
Much of the technical detail and substance on areas such as
disclosure content requirements will be contained in
regulations. The Government is promising further
"extensive consultation" on these over the coming
year. Also still to be drafted are the transitional and
consequential amendments to fully implement the new regimes.
Where to from here?
This is an important opportunity to influence the shape of the
Bill which the Government hopes to get into the House in early
October, before Parliament is dissolved for the 26 November general
election, for enactment early in the next term.
The use of exposure draft legislation is particularly
appropriate for technical policy areas which require a practical
knowledge of what will and will not work in the marketplace.
Since the unhappy experience of the financial adviser reforms, the
Government has favoured this approach as it reduces the risk of
To encourage participation, MED plans to hold public
stakeholder meetings in tandem with the written submissions.
MED will release the meeting schedule shortly.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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