To provide DIMS under the FMC Act you must hold a DIMS market services licence issued under the FMA Act.
For more information on the process involved, please see our licensing page.
DIMS licensees are obliged to:
meet financial and investor reporting requirements
disclose a wholesale service
provide the FMA with reporting required by the Act.
DIMS licensees need to make sure their retail clients have all the information about investment decisions, how the investments have performed, and what the fees are.
Refer to reg210 and reg 211 for the full list of the information you need to report to retail investors.
Your ongoing reporting requirements are:
Transaction information: record of all transactions, name of issuer, the price of the financial products transacted, the amount and date transacted
Assets profile: name of each class of financial product in the investor’s portfolio, who issued the financial products, and the number of products held
Portfolio administration profile: record of all dividends paid, distribution or income received during the period, all percentage-charges paid, individual action fees paid, and other corporate information that might affect an investor’s portfolio (eg, a bonus issue)
Portfolio valuation: current and most-recent valuation of all financial products in the investor’s portfolio; how and when the valuation is done (eg, the market price of the quoted product), and the total value of the financial products in the portfolio.
You will also need to provide the following annual reporting to your investors:
The investment objective
The investment mix
Any material changes to the strategy during the year
Investor’s portfolio return
Annual and five-year return of the portfolio (pre-tax but after fees)
A bar graph of the portfolio’s return (pre-tax but after fees) with a bar for each disclosure year since the investor started using the service
Name each class of the financial products in the investor’s portfolio, the products’ issuers, and the number of products in the portfolio
The current or most-recent value of each of those financial products
Statements of when and how the valuation was done
The value of the portfolio at the beginning and end of the disclosure year
Details of the amount of cash held for the investor at the close of disclosure year
Details of dividends paid, all interest paid, and other distribution or income received
The total percentage-based charges paid for the investor’s portfolio during the year expressed as a percentage of the investor’s portfolio
The total amount of other charges the investor has paid for the portfolio
The individual action fee paid during the disclosure year for the investor’s portfolio
A pie chart segregating all financial products, by asset category, of the investor’s portfolio at the end of the disclosure year
You need to tell investors if your DIMS is a wholesale service
DIMS licensees need to let their investors know if they are receiving a wholesale service. This is a requirement of reg194.
DIMS licensees must not buy or sell a financial product for a retail investor under a wholesale service unless they have given a prior warning to the retail investors. The retail investors must also acknowledge and authorise the service.
The warning must be prominently displayed on a document telling the investor:
the service is not a retail service
the service is not covered by the licence and FMA Act protections might not apply.
Tell us if you breach a limit break
As a DIMS licensee, you are governed by what the investor allows you to do, based on the investment authority - see s437.
The investment authority spells out the nature and type of investments you can make, and the amount in each asset type you can invest in.
You have obligations to do limit break reporting quarterly (reg 231) and annually, and when your limit break is not corrected (reg 230) within five days of the break happening.