Financial Markets Authority

The Financial Markets Authority (FMA), also known as Te Mana Tātai Hokohoko in Māori, is the primary regulator of financial markets in New Zealand.It was established in 2011 as an Independent Crown Entity.The FMA is not responsible for the performance of financial markets.Its purpose is to facilitate fair, efficient, and transparent financial markets that promote confidence in investors, businesses, and consumers.

Mission and objectives

The FMA operates with a dual mandate:

1.Protect Investors and Consumers - Making sure people and businesses can participate in financial markets with confidence, underpinned by sound information and explicit regulatory protections.

2.Build Trust and Stability - Create a strong financial ecosystem that drives growth, innovation, and competition with transparency and accountability.

The Authority aims to enable businesses and investors to make informed decisions, and to encourage participants to utilise the financial system in a way that increases overall economic benefit.

Core Functions

The FMA has a comprehensive role in supervising and regulating New Zealand's financial markets.

• Licensing Financial Entities - Licensing firms and individuals who offer financial products and services, such as brokers, advisers, auditors, custodians, and KiwiSaver providers.

• Market Supervision - Monitoring financial institutions and industry practices to ensure they comply with the law and regulatory obligations.

• Enforcement and Investigations - Take action when there is misconduct, fraud, or conduct nationally that breaches trust and confidence, thereby protecting the integrity of financial markets.• Development of Local Policies and Guidance - The FMA provides guidance, strategies, and expectations for businesses to ensure compliance with all financial legislation.

• Creation of Local Consumer Educational Material - Brochures related to stocks and shares, along with other educational resources, tools, and materials, will be developed to support the financially illiterate person in financial and investment decisions.

• Monitoring Local Risk - The FMA identifies the risks and opportunities within New Zealand's financial system and market as a whole so that all risks are actively managed to ensure stability.

The FMA works with the RBNZ, coordinating to establish a jointly regulated settlements system and others, which allows for the operational use and development of transaction development across New Zealand within a fair, legally secure environment.

Legal Framework

The FMA operates and carries out its functions under several key pieces of legislation.

• the Financial Markets Authority Act 2011

• the Financial Markets Conduct Act 2013

• the Financial Markets Supervisors Act 2011

• the KiwiSaver Act 2006

• the Auditor Regulation Act 2011

• the Financial Service Providers (Registration and Dispute Resolution) Act 2008

• the Financial Market Infrastructures Act 2021

• the Anti-Money Laundering and Countering Financing of Terrorism Act 2009

• the Financial Markets Conduct of Institutions Amendment Act 2022

The legislative framework provides the FMA with the ability and scope to regulate and protect the public interest in a manner relevant to their risk and expectations.

Governance and Leadership

The governing body of the FMA is the Board, established by the Crown Entities Act 2004, which provides the strategic direction for the Authority and ensures that the Authority operates in accordance with defined objectives as expected by the public.The Board has several functions in its governance role.

• determining the Authority's strategic direction.

• appointing and holding the Chief Executive and senior leadership team accountable for achieving performance.

• satisfying themselves that statutory objectives and financial responsibilities are met.

• ensuring there are good and transparent relationships with external parties, including with businesses associated with the Financial Services and Financial Markets, and government departments and agencies related to their businesses.

• satisfying themselves that adequate resources are provided to the Authority to comply with budgets, and that the Authority is utilizing allowable resources, in a manner agreed to.

The governance framework enables the FMA to operate independently of interested parties, ensuring accountability and transparency.

Cooperation and Stakeholder Engagement

The FMA works with a range of stakeholders to consistently meet its mandate:

• Industry Participants – Financial Markets are Financial Institutions, Brokers, Advisers, and Issuers.

• Government Agencies – Ministry of Business Innovation and Employment (MBIE).

• Consumers and Investors - Tools, education, and consumer protections are developed and issued to enhance public trust and understanding of the industry.

• International Engagements – Global regulators and network engagements come together so that the FMA can work on regulatory relationships of international issues.

Staying engaged with stakeholders openly and transparently allows the FMA to ensure that its own policies are practical, refined, and progressing towards a responsive financial service industry and market.