Content supplied by the Financial Markets Authority
New Zealand investors will benefit from more competition for their investment dollar and more choice of investment options as a result of an international agreement signed today.
The Asia Region Funds Passport, signed by New Zealand, Australia, Japan and Korea, facilitates the offering of high-quality managed funds among the signatory economies. This means that fund managers from the other signatory countries can offer products to New Zealand investors, bringing more choice and more competition to the New Zealand managed fund market.
The agreement also benefits local fund managers, as it allows them to access and offer their products in the other signatory countries.
Fund managers wanting to offer new funds here – and New Zealand fund managers wanting to offer funds offshore – need to apply for a special licence. The conditions of the licence include that the fund manager must have significant scale, a track record of having offered the fund for at least five years and that the offered fund includes only highly diversified, vanilla investments.
The Financial Markets Conduct Act (FMCA) will apply to any offshore fund manager wishing to sell products to New Zealanders. And it is the existence of the FMC Act that meant New Zealand was able to participate in the agreement, as New Zealand could demonstrate that it has in place a strong regulatory framework compliant with International Organisation of Securities Commission (IOSCO) principles.
Signing of the Memorandum of Co-operation (MoC) completes international negotiation of the Passport arrangements and is the culmination of over six years work. New Zealand, Australia, Japan, Korea, the Philippines, Singapore and Thailand have contributed expertise to developing the framework.
The Memorandum of Co-operation comes into effect on 30 June 2016 and some other regional economies are expected to join before then. Over time, the aim is to ensure all other eligible APEC economies are able to participate in the Passport. Participating economies have up to 18 months from 30 June 2016 to implement domestic arrangements in accordance with the rules.
The MoC is available on the Asia Region Funds Passport site http://fundspassport.apec.org/.