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Brief Counsel

So you want to be licensed under the FMCA...

02 April 2014

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The Financial Markets Authority (FMA) is now receiving applications for market services licences under the Financial Markets Conduct Act (FMCA) and has issued how-to guides for applicants.

We walk you through the process.

Licence categories

FMA has prepared licence application guides for fund managers, derivatives issuers, discretionary investment management service (DIMS) providers, independent trustees of restricted schemes, crowd funding and peer-to-peer lending intermediaries.

Each guide sets out:

  • the minimum standards for the licence, including specific questions which need to be answered in respect of the standard together with commentary on those questions
  • what licence applicants will be asked to provide in the application form, and
  • guidance on what further information may be sought by FMA.

Cost schedule

​License ​Application fee (including GST) ​Hours after which additional fee may be charged
Manager of registered scheme ​$3,565 ​25 hours
​DIMS provider ​$3,565 ​25 hours
​Independent trustee of a restricted scheme ​$2,139 ​15 hours
​Derivatives issuer ​$10,695 ​70 hours
​Crowd funding service ​$6,238.75 ​40 hours
​Peer-to-peer lending service ​$6,238.75 ​40 hours

FMA can charge an additional fee (calculated on hourly rates) for complex applications requiring longer than the specified hours.

Multiple applications

The FMA is required to apply a discount where applicants apply to be licensed for a second (or more) service at the same time or within six months of their initial application. In most cases, a 50% discount will be applied. But, where the subsequent application or variation relates to a derivatives licence, the discount will be only 15%.
The independent trustee guide indicates that independent trustees cannot apply for any other licence type at the same time. Helpfully, however, it acknowledges that independent trustees need not necessarily be individuals - a licensed independent trustee may be an individual or a sole corporate trustee.

Timeframe

The deadlines differ.

Derivatives issuers have until 1 December 2014, with a two-year deemed licence granted to banks and other existing authorised futures dealers should they require a licence under the FMCA (essentially, if they are entering into derivatives with anyone other than wholesale investors). 

DIMS providers have until 1 December 2014 but MBIE is consulting on this and may provide a transitional period.

For MIS managers and independent trustees, the deadline will depend on transitional provisions and when their first scheme opts into the FMCA regime.  Continuous MIS managers and independent trustees have until 1 December 2016 to be licensed but would (if new trusts are established or continuity is lost) need to move earlier. 

We expect some intending providers of independent trusteeship services will seek licences as soon as practicable, so as to be available to a range of schemes ahead of their opt-in dates. 

We would recommend that anyone considering making a licence application makes sure they understand whether they will have the benefit of any transitional relief and allows adequate time to complete the licensing process. 

Our thanks to Natan Karon for writing this Brief Counsel. For further information, please contact the lawyers featured.

Chapman Tripp’s earlier commentary – Financial markets licensing: much more than just box ticking – is available here.

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