Draft policy decisions about new regulations to New Zealand's financial markets and "significant freeing up of capital raising" have been announced in Parliament by Commerce Minister Craig Foss.
Changes in the Financial Markets Conduct Bill include allowing new forms of capital raising such as crowd-funding platforms and person-to-person lending services. The move to open new channels of capital has been welcomed by the business community.
Informed by recommendations of the industry-led Capital Markets Development Taskforce, the bill would require new licensing criteria for fund managers, discretionary investment management services and issuers of derivatives.
It also calls for single-product disclosure statements giving clear data to retail investors, with a public register "that contains richer detail" so investors can easily compare products.
The changes intend to give investors better access to information that would help them make decisions about placing their money and ensuring investments are well governed.
"Investors need to be able to make investment choices according to performance and risk differences of schemes," the minister's Financial Markets Conduct (FMC) Regulations Paper stated.
Foss said the regulations would bring significant reform to the financial markets.
"The FMC Bill is a key pillar in the capital markets workstream of the Government's Business Growth Agenda... aimed at increasing investment in our capital markets so our firms can grow," he said yesterday.
"It is aimed at creating confident and informed investors and fair, efficient and transparent financial markets."
Business NZ chief executive Phil O'Reilly said it was helpful the Government was looking to mainstream new forms of capital raising such as crowd funding.
They would become increasingly popular in New Zealand so it was sensible to put them in the same regulatory framework as everything else.
"What we want to do is encourage capital raising in as many different forms as possible."
Crowd funding, where individuals contribute capital to a specific venture, is restricted to single projects such as an art show because current security laws bar raising capital without a full investment prospectus.
If approved, the changes would come into force in April 2014, Foss said.
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