Dated at Wellington this 21st day of February 2017.
General Counsel, Financial Markets Authority
Statement of reasons
This notice comes into force on 24 February 2017 and is revoked on 23 February 2019.
The notice exempts certain overseas custodians from the requirements in regulations 9 and 10 of the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 (the Regulations) to obtain an assurance engagement from a New Zealand auditor that covers the New Zealand assurance engagement matters specified in regulation 10.
The exemption applies to an overseas custodian who obtains assurance engagements in 1 or more of the jurisdictions listed in the Schedule that together cover all FMCA custodial services provided by the custodian or its sub-custodians to New Zealand clients. The exemption applies for the custodian’s relevant period ending on or after 24 February 2017 but before 24 February 2018.
The Financial Markets Authority (the FMA), after satisfying itself of the matters set out in section 148(2) of the Financial Advisers Act 2008, considers it appropriate to grant this exemption because—
the exemption applies only to custodians who have their principal place of business outside New Zealand, and who obtain assurance engagements in 1 or more of the jurisdictions listed in the Schedule that together cover all FMCA custodial services provided by the custodian or its sub-custodians to New Zealand clients:
the exemption applies only in relation to jurisdictions in which custodians are required to obtain assurance engagements from auditors who are subject to auditing standards and oversight that are broadly equivalent to those applying in New Zealand. As such, the FMA is confident of the comparability and quality of those overseas assurance engagements:
if a custodian obtains an assurance engagement that is prepared by an auditor who is registered or licensed to provide assurance engagements in one of those jurisdictions and complies with the regulatory requirements in that jurisdiction, the costs associated with requiring the custodian to also obtain an assurance engagement prepared by a New Zealand auditor in compliance with regulations 9 and 10 of the Regulations outweigh the benefits to investors and would not be justified by the benefit of compliance:
the securities regulators in the jurisdictions listed in the Schedule are signatories to the International Organization of Securities Commissions Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. This will allow the FMA to seek assistance from the relevant regulator if enforcement issues arise.
Date of notification in Gazette: 23 February 2017.
This notice is administered by the Financial Markets Authority.