The Financial Markets Authority (FMA) wants feedback on how to exercise its regulatory designation and exemption powers for reporting entities under the Financial Markets Conduct Act.
Submissions on the consultation paper close on 28 February 2014.
Under the Financial Markets Conduct Act 2013 (FMCA), which begins to come into effect from 1 April this year, the FMA will be the primary financial reporting regulator for financial markets participants (referred to as “FMC reporting entities”).
FMA will have the ability to vary reporting obligations for FMC reporting entities by:
- varying their accountability designation, and
- granting exemptions.
Public accountability designations
The designations will influence which tier of the External Reporting Board (XRB) Accounting Standards Framework an entity will be in and what standard it must report to. FMA will be able to vary a designation on either an individual entity basis or for classes of entities.
Currently all ‘issuers’ must prepare financial statements under full accounting standards. FMA is proposing a three tier system with disclosure requirements calibrated to the level of public accountability.
FMA intends to take the existing exemptions into the new regime, except where these are judged to be no longer appropriate or necessary. Even if they are to go, however, they will still be available during the transition period for entities which continue to report under the Financial Reporting Act 1993, subject to any amendments or expiries.
FMA’s proposed exemptions policy is not significantly different to the status quo, although amended to align it with the FMCA and to reflect FMA’s new powers.
However, the proposed structure of the class exemptions is likely to be significantly different to the current one.
- February – FMA holds consultation workshops.
- 28 February – submissions due.
- March 2014 – FMA to publish transitional guidance for FMC reporting entities.
- 1 April 2014 - Financial Reporting Provisions (Part 7) of the FMCA comes into effect.
- April 2014 - FMA to publish final policies on and initial notices for exemptions and higher public accountability designations.
Entities will become FMC reporting entities at different points in time. In March 2014 FMA will publish transitional guidance on which Act entities need to report under for each financial year during the transitional period.