NZFMA Dealer Accreditation key terms

New Zealand's principal statute governing offers of financial products, market services, fair dealing, disclosure and enforcement, administered by the FMA. It replaced the Securities Act 1978 and Securities Markets Act 1988 regime.

The Crown entity that regulates New Zealand's financial markets, licenses market service providers, monitors conduct, investigates breaches and can impose civil remedies or refer criminal matters.

Activities such as dealing, advising, discretionary investment management, crowdfunding and derivatives issuing that require an FMA market services licence and compliance with licence conditions, including the fair dealing and client-care obligations.

Standard and bespoke conditions attached to a licence, covering matters such as governance, capability, record keeping, client money, complaints and reporting, which the licensee must satisfy on a continuing basis.

An individual nominated by a licensee to perform specified market services on its behalf, who must meet fit-and-proper, competence and supervision requirements and whose conduct binds the licensee.

A firm whose principals or advisers are authorised to provide financial advice or other market services under the FMC Act framework, carrying accountability for the conduct of its advisers.

The FMC Act's prohibitions on misleading or deceptive conduct, false or unsubstantiated representations, and unsubstantiated claims in connection with financial products and services, applying to conduct in trade.

Conduct in trade that misleads or deceives, or is likely to, even without intent to deceive. Silence or omission can qualify where it creates a false impression.

A representation made in trade about a financial product or service that the person cannot substantiate on reasonable grounds, regardless of whether it is factually true at the time.

The obligation to give clients clear, timely and not-misleading information about products, services, fees, conflicts and risks, including product disclosure statements and terms of trade where required.

A prescribed disclosure document for an offer of financial products, summarising key terms, risks, fees and the issuer's obligations in a form that is clear and concise.

Information a dealer must give a retail client before or when providing services, covering identity, licence status, fees, conflicts, dispute resolution and how instructions are handled.

The structured process of accepting a new client, covering identity verification, suitability and risk assessment, account agreements, fee disclosure and setting of trading authorities.

The AML/CFT process of identifying and verifying a customer's identity, understanding the nature of their business and assessing money-laundering or terrorism-financing risk before and during the relationship.

Additional, more intensive checks applied to higher-risk customers, such as politically exposed persons or those in high-risk jurisdictions, including source-of-funds and source-of-wealth verification.

The natural person who ultimately owns or controls a customer or the product being traded, identified through ownership thresholds and control tests rather than legal title alone.

A person entrusted with a prominent public function, or a close associate or family member, who presents higher corruption risk and therefore attracts enhanced due diligence and senior sign-off.

Evidence of where the money used in a transaction or account came from, such as salary, sale proceeds or savings, used to test consistency with the customer's known profile.

An explanation, supported by evidence, of how a customer's overall wealth was accumulated, distinct from the funds used in a particular transaction.

A confidential report to the Financial Intelligence Unit, via goAML or prescribed means, disclosing a transaction or activity suspected of involving proceeds of crime or terrorist financing.

Disclosing to a customer or third party that a suspicious activity report has been made or that an investigation is underway, which is itself an offence under AML/CFT law.

Money held on behalf of clients for their trading or investment activity, which must be segregated from the firm's own assets and reconciled regularly under custody and client-money rules.

The periodic comparison of internal records against external statements, custodian or bank records to confirm balances, positions and client entitlements, with discrepancies investigated and documented.

The chronological, tamper-evident record of actions, orders, communications and approvals that allows an independent reviewer to reconstruct what happened, when and by whom.

The requirement to create and retain accurate records of client instructions, orders, disclosures and compliance checks for prescribed periods, in a form retrievable on request by regulators.

The duty to take reasonable steps to obtain the best available outcome for client orders, considering price, cost, speed, likelihood of execution and settlement, and to disclose the execution policy.

The controlled process of receiving, validating, recording, routing and executing client orders promptly and in accordance with client instructions, mandates and applicable market rules.

The principle that client orders take precedence over the firm's own proprietary trading, and that orders are executed in a fair and timely sequence without improper advantage to the firm or its staff.

Trading ahead of a known client order to profit from the expected price impact, which is market misconduct and a breach of the fair dealing and client-priority obligations.

Conduct that creates a false or misleading appearance of trading activity or price, such as wash trades, spoofing or ramping, and which is prohibited under the fair dealing provisions.

Trading or tipping in financial products while in possession of material information not generally available, or procuring others to trade on that information.

The accurate and timely reporting of executed transactions to clients, the market or the regulator as required, including confirmations, transaction reports and position disclosures.

Situations where the firm's or an adviser's interests could compromise duties to clients, which must be identified, avoided where possible, or managed and disclosed transparently.

A benefit, commission or non-monetary incentive given or received that could impair the duty to act in a client's best interests, requiring assessment, controls and disclosure.

The documented internal procedure for receiving, investigating and responding to client complaints within set timeframes, with escalation to an approved dispute resolution scheme if unresolved.

An independent, approved scheme that resolves complaints between financial service providers and clients when internal processes do not settle the matter, with decisions binding on the provider.

The obligation to notify the FMA promptly of material breaches or suspected breaches of licence conditions, market services obligations or the fair dealing provisions.

An assessment of honesty, integrity, competence and financial soundness applied to licensees, directors, senior managers and nominated representatives before and during authorisation.

The process of gathering information about a client's objectives, financial situation, risk tolerance and experience to determine whether a product or service is appropriate for them.

The contract setting out the terms on which services are provided, including authority to act, fees, settlement, risk disclosures and the client's obligations and rights.