Market operators
A financial product market is a facility where financial products are bought or sold, or where offers or invitations to buy or sell financial products are made. S309 of the Financial Markets Conduct Act (the Act) sets out what is considered a financial product market and what is not.
Anyone operating a financial product market must be registered on the Financial Service Providers Register (FSPR). You must also be licensed unless the market is exempt. Exemptions may apply if fewer than 100 transactions occur in a financial year, or if the value of products traded in a financial year is less than $2 million. The full list of exemption conditions is found in s312 of the Act.
The Minister of Commerce and Consumer Affairs issues financial product market licences, with advice from us. The Minister and the FMA must consider the following before issuing a licence to a financial product market operator:
The Minister must also be satisfied that an applicant will be able to meet the general obligations of licensed market operators, found in s314 of the Act.
A market operator must not operate markets that are not specified in a licence, but a licence may cover more than one financial product market.
The standard conditions for a licence include:
The Minister may also place other conditions on the licence. The market operator can subsequently request changes to the conditions of its licence, or the Minister may vary the conditions on his or her own initiative.
A licence may be suspended or cancelled under certain circumstances, set out in s323 of the Act.
A person who wants a licence to operate a financial product market should apply to us in writing. We will assess your application and ensure you have provided all relevant information, before giving the Minister advice about the application, which we must do within a reasonable time.
The information included with your application should clearly demonstrate:
A licensed market cannot be operated without market rules, and s328 of the Act sets out what those rules must include.
Any application for a financial product market licence needs to include the proposed rules for the market. It also needs a description of any consultation that has been carried out about the rules (public or targeted); details of any relevant international best practice; and evidence that the rules meet what’s required under s328 of the Act.
For more information on the approval of market rules, see s327 to 336 of the Act.
As a market operator you must ensure your licensed markets operate in a fair, orderly and transparent way.
As a market operator, you must make sure your licensed markets operate in a fair, orderly and transparent way (s314), and have arrangements in place for the following:
You must also ensure you have the resources required to operate your markets properly, and you are able to continue to meet any conditions of your licence.
As a market operator you are required to provide the FMA with a periodic self-assessment on how well you have complied with your obligations during that period (s337).
We must also carry out periodic reviews of your compliance and publish our findings in a report. If we find that you are not meeting your general obligations, we can ask you to put an action plan in place.
As a market operator you are obliged to notify us of certain events, such as when you take disciplinary action for breaches of your market rules, or when you suspect someone may have breached the legislation. You must also give us information and assistance when we need them to carry out our regulatory role.
Full details of the ongoing operational obligations of market operators are contained in subpart 8 of part 5 of the Act.
As a market operator you need to provide us with a periodic self-assessment on how well you have complied with your obligations during that period (s337).
We need to carry out periodic reviews of your compliance and publish our findings in a report. If we find that you are not meeting your general obligations, we can ask you to put an action plan in place.
As a market operator, you are obliged to notify us of certain events, such as when you take disciplinary action for breaches of your market rules, or when you suspect someone may have breached legislation. You must also give us information and assistance when we need them to carry out our regulatory role.
Full details of the ongoing operational obligations of market operators are found in subpart 8 of part 5 of the Act.
Each year the FMA undertakes a review of how well NZX has complied with each of its statutory obligations during the review period. We are also required to report periodically on how well other market operators are meeting their licensed market operator obligations. See all the NZX reports, ASX 24 reports, Ice Futures Europe reports, and Ice Futures US reports.