This notice comes into force on 24 February 2017 and is revoked on 23 July 2018.

The notice exempts certain overseas custodians from the requirement in regulation 87 of the Financial Markets Conduct 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 88.

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 of the scheme property of registered schemes held by the custodian or its sub-custodians. 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 557 of the Financial Markets Conduct Act 2013, 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 of the scheme property of registered schemes held by the custodian or its sub-custodians:

• 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 87 and 88 of the Regulations outweigh the benefits to investors and are unnecessary compliance costs:

• 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:

• as such, the FMA is satisfied that granting of the exemption is desirable in order to promote a number of purposes of the Financial Markets Conduct Act 2013, specifically it will ensure appropriate governance arrangements that allow for effective monitoring, avoid unnecessary compliance costs, and promote flexibility in financial markets:

• as the exemption is limited to custodians preparing assurance engagements and those custodians are subject to audit oversight that is broadly equivalent to that in New Zealand, the FMA is satisfied that the exemption is not broader than is reasonably necessary to address the matters that give rise to it.