Financial Market Licensing and Exemptions Under New Zealand's Financial Markets Conduct Act 2013

Abstract

New Zealand’s Financial Markets Conduct Act 2013 imposes licensing on financial product market operators. With licensing comes an obligation to monitor and regulate the market which is not currently provided by over-the-counter markets such as Unlisted and ShareMart. Licensing these markets would increase their operating costs, possibly to the point of making them financially unviable, and discourage participation by small and medium companies wanting a low compliance cost market. The recent decision to allow Unlisted to operate as an exempt market shows that concerns about the negative effects compliance costs outweighed concerns about unregulated public markets weakening the financial system. Together with the licensing of new financial intermediaries, such as equity crowdfunding platforms and peer-to-peer lenders, and allowing specific disclosure exemptions for the exchange’s new second board market the new regulatory system is flexible and supports financial sector innovation.

Keywords: Market regulation, OTC markets, New Zealand

JEL Classification: G28, K22