Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698753159392.pdf (New Zealand)
2014/343 Financial Markets Conduct (FMC Reporting Entities with Higher Level of Public Accountability) Notice 2014 Pursuant to section 461L(1)(a) of the Financial Markets Conduct Act 2013, the Financial Markets Authority, being satisfied of the matters set out in section 461L(2) of that Act, issues the following notice.
1 2 3 1 2 3 Contents Title Commencement FMC reporting entities considered to have higher level of public accountability Page 1 1 1 Notice Title This notice is the Financial Markets Conduct (FMC Reporting Entities with Higher Level of Public Accountability) Notice 2014.

Commencement This notice comes into force on 1 December 2014.
FMC reporting entities considered to have higher level of public accountability The following classes of FMC reporting entities are specified for the purposes of section 461K(1)(h) of the Financial Mar- kets Conduct Act 2013: 1 Statement of reasons Financial Markets Conduct (FMC Reporting Entities with Higher Level of Public Accountability) Notice 2014 2014/343 (a) (b) an FMC reporting entity that holds, or is an authorised body under, a licence under Part 6 of that Act that au- thorises the entity to act as a derivatives issuer: an FMC reporting entity that is a recipient of money from a conduit issuer (as defined in section 453 of that Act).
Dated at Wellington this 7th day of November 2014.

Elaine Campbell, Director of Compliance, Financial Markets Authority.

Statement of reasons This notice comes into force on 1 December 2014.

Section 461K(1) of the Financial Markets Conduct Act 2013 (the FMCA 2013) lists the FMC reporting entities that are considered to have a higher level of public accountability than other FMC reporting entities.

FMC reporting entity is defined in section 451 of the FMCA 2013.
Section 461J of the FMCA 2013 requires the External Reporting Board to have regard to which FMC reporting entities are consid- ered to have a higher level of public accountability when the Board is preparing a proposal to vary or replace the strategy under sections 30 to 33 of the Financial Reporting Act 2013.
The purpose of those sec- tions is to provide for a system of tiers of financial reporting that im- pose different financial reporting requirements in respect of different classes of reporting entities in order to ensure that the requirements that apply in respect of those entities are appropriate (see section 29 of the Financial Reporting Act 2013).
Section 461L(1)(a) of the FMCA 2013 gives the Financial Markets Authority the power to issue a notice specifying classes of FMC re- porting entities that are to be added to the list in section 461K(1) of 2 2014/343 Financial Markets Conduct (FMC Reporting Entities with Higher Level of Public Accountability) Notice 2014 Statement of reasons the FMCA 2013 (see section 461K(1)(h)).
This notice specifies 2 classes of FMC reporting entities for that purpose as follows: • an FMC reporting entity that holds, or is an authorised body under, a licence under Part 6 of the FMCA 2013 that authorises the entity to act as a derivatives issuer.

A derivatives issuer is a person that is in the business of entering into derivatives: an FMC reporting entity that is a recipient of money from a conduit issuer (as defined in section 453 of the FMCA 2013).
The Financial Markets Authority, after satisfying itself as to the mat- ters set out in section 461L(2) of the FMCA 2013, considers it ap- propriate to issue this notice because,— • • in relation to licensed derivatives issuers, those entities should be specified as having higher public accountability as they usu- ally have significant exposures to financial instruments and need to manage their capital carefully.
To assist their clients in deciding whether the issuers are creditworthy, full disclos- ure about the issuers’ exposure to and policies for managing risk around financial instruments and capital management is required.

The highest tier of financial reporting provides the best information on financial instruments and capital manage- ment in line with international best practice.
This key infor- mation can be omitted under lower tiers of financial reporting: in relation to recipients of money from a conduit issuer, those entities should have the same level of accountability as they would have if they themselves issued the product from which the money is raised.
This is because,— • when conduit issuers raise money, the main risk for in- vestors often comes from the financial performance of the recipient of the money, rather than from the conduit issuer; and the conduit issuers’ ability to pay returns or make re- payments often depends on them receiving repayments from the recipients of the investment money: • the notice is necessary or desirable for promoting the follow- ing purposes of the FMCA 2013: • to promote the confident and informed participation of businesses, investors, and consumers in the financial markets: 3 • • Statement of reasons Financial Markets Conduct (FMC Reporting Entities with Higher Level of Public Accountability) Notice 2014 2014/343 • to provide for timely, accurate, and understandable in- formation to be provided to persons to assist those per- sons to make decisions relating to financial products or the provision of financial services.
Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 13 November 2014.

This notice is administered by the Financial Markets Authority.

12 4 Wellington, New Zealand: Published under the authority of the New Zealand Government—2014