If you intend to provide financial services under the FMC Act and, if you are registered, or in the process of getting registered as a financial service provider (FSP), you must apply to the Financial Markets Authority (FMA) for a license to provide services under the Financial Markets Conduct Act 2013 (FMC Act).

Financial services you need to be licensed for defined in the FMC Act

Manager of a registered scheme – licensed

A manager of a registered scheme manages the scheme’s investments, and administers the scheme. A registered scheme is offered in accordance with regulations under the FMC Act.
A managed investment scheme pools money from a number of investors, who rely on the expertise of the scheme manager to preserve their investment.

Discretionary Investment Management Service (DIMS)

Discretionary investment management services (DIMS) are those where an investor gives a provider the authority to make decisions about buying and selling financial products on their behalf, often without having to refer to them.

If the DIMS provider’s clients include retail investors, they must be licensed by the FMA, except where the provider is:

• a provider to wholesale investors only;
• not required to be licensed, owing to an FMA exemption, or exemption in the FMC Act;
• an authorised body that is authorised to provide the service under a licensee’s license.

Independent trustee of a restricted scheme – licensed

Every restricted managed investment scheme must have a licensed independent trustee. A restricted scheme is a KiwiSaver, superannuation or workplace savings scheme registered as a managed investment scheme on the Register.

Derivatives issuer – licensed

A derivatives issuer is anyone in the business of entering into derivatives.

The FMC Act contains a wide definition of derivatives, which include:

• futures contracts and forwards;
• options (except options to acquire an equity security, a debt security or a managed investment product by way of issue);
• swaps;
• contracts for difference, margin contracts and rolling spot contracts, caps, collars, floors, and spreads;
• a provider to wholesale investors only;
• not required to be licensed, owing to an FMA exemption, or exemption in the FMC Act;
• an authorised body that is authorised to provide the service under a licensee’s license.

A derivatives issuer must hold a license from the FMA if they make a regulated offer of derivatives, except where they are.

Provider of prescribed intermediary services – licensed

This financial service is split into 2 categories – the provision of crowd funding, and peer-to-peer lending services.

Operating a crowdfunding service (licensee)

A crowdfunding service is where you act as an intermediary between companies issuing shares and investors by providing the facility, usually a website, where the offer can be made to the public.

Financial advice service as financial advice provider (FAP) – licensee

Regulated financial advice to retail clients can only be provided by, or on behalf of, a financial advice provider (FAP) licensed by the FMA.

Financial advice is where a provider:

• makes a recommendation, or gives an opinion, about buying or selling financial advice products, or
• designs an investment plan based on a client’s investment goals and analysis of their financial situation, which includes one or more recommendations on how to achieve those goals.

This service can be offered directly, or through a financial adviser or nominated representative, who are not required to be licensed themselves.

Operating a peer-to-peer lending service (licensee)

A peer-to-peer lending service is one where you act as an intermediary between borrowers and lenders. Loans are usually for personal, charitable or small business purposes.

Supervisor under an FMC offer

A supervisor is defined as a person licensed to supervise either a registered scheme or a regulated offer of debt securities.

Administrator of a financial benchmark

An administrator of a financial benchmark is a person who controls the generation and operation of a financial benchmark. A benchmark administrator licensed by the FMA should select this service.

Applying for a license

Before you apply for a license to the FMA you’ll need to be either registered or preparing to register as an FSP on the Financial Service Providers Register (FSPR).

When you apply to register on the FSPR, you’ll be asked to select the financial service(s) you intend to provide. If any of these are licensed services under the FMC Act, you must then apply to the FMA for a license. The licensed service will only display on your FSP registration once the FMA has approved the license.

Note:
All information from New Zealand Companies Office website.