NZX Adviser flashcards
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36 cards. Read the term and the definition here. The deck at the top of this page is optional.
- FMC Act 2013
- Primary New Zealand statute regulating financial products, services, and conduct; establishes licensing and disclosure obligations for advisers and market participants.
- FMA
- Financial Markets Authority; New Zealand's conduct regulator responsible for licensing, monitoring, and enforcing compliance with financial markets law.
- NZX Regulation
- The body that enforces NZX market rules and oversees listed issuers and participants to ensure fair and transparent trading.
- Code of Professional Conduct
- Standards for financial advisers covering competence, client care, and ethical behaviour; breaches can result in disciplinary action.
- Continuous disclosure
- Obligation for listed issuers to immediately disclose material information that could affect share price or investment decisions.
- AML/CFT Act 2009
- New Zealand law requiring financial institutions to verify client identity, monitor transactions, and report suspicious activities to prevent money laundering.
- Suitability assessment
- Process of gathering client information on goals, risk tolerance, and financial situation to ensure advice is appropriate for the client.
- Disclosure statement
- Document that financial advice providers must give clients, detailing fees, conflicts of interest, and complaint procedures.
- Record-keeping requirement
- Advisers must retain client records and advice documentation for at least seven years under FMC Act and AML rules.
- T+2 settlement
- Standard settlement cycle for NZX equities and debt securities; trade date plus two business days for final transfer of cash and securities.
- Limit order
- Order to buy or sell a security at a specified maximum or minimum price; remains open until executed, cancelled, or expired.
- NZX 50 Index
- Market-cap weighted index of the 50 largest eligible companies listed on the NZX Main Board; reviewed quarterly.
- Short selling
- Sale of borrowed securities with obligation to repurchase later; permitted under FMC Act with disclosure and settlement rules.
- Bond duration
- Measure of a bond's price sensitivity to interest rate changes; modified duration approximates percentage price change for a 1% yield change.
- Yield to maturity
- Total return on a bond if held to maturity, assuming all coupon payments are reinvested at the same rate.
- Credit rating
- Assessment by agencies like S&P or Moody's of an issuer's creditworthiness and likelihood of default on debt obligations.
- NZGBs
- New Zealand government bonds issued by the New Zealand Debt Management Office; considered low credit risk and benchmark for domestic fixed income.
- Accrued interest
- Interest earned on a bond since the last coupon payment; buyer pays seller the accrued amount at settlement.
- Managed investment scheme
- Pooled investment vehicle regulated under FMC Act; must have licensed manager and comply with disclosure and governance requirements.
- ETF
- Exchange-traded fund; trades on NZX like a share, tracks an index or basket, and has management fees and tracking error.
- Diversification
- Spreading investments across assets to reduce unsystematic risk; asset allocation is a key driver of long-term returns.
- Efficient frontier
- Set of optimal portfolios offering highest expected return for a given level of risk, derived from Modern Portfolio Theory.
- Total expense ratio
- Measure of total annual costs of a fund, including management and administration fees, expressed as a percentage of assets.
- Futures contract
- Exchange-traded agreement to buy or sell an asset at a future date and price; standardised and subject to margin requirements.
- Option premium
- Price paid by buyer to seller for an option contract; represents the cost of acquiring the right to exercise.
- Initial margin
- Collateral posted at the initiation of a derivatives trade to cover potential future losses.
- Delta
- Option Greek measuring change in option price for a one-unit change in the underlying asset price.
- Counterparty risk
- Risk that the other party to a derivatives contract defaults on its obligations; higher in OTC than exchange-traded contracts.
- Imputation credits
- Tax credits attached to dividends from New Zealand companies, representing tax already paid at the company level.
- KiwiSaver
- Voluntary retirement savings scheme in New Zealand with employer and government contributions; funds locked until age 65 (with exceptions).
- PIE rules
- Portfolio Investment Entity tax rules that attribute taxable income to investors at their prescribed investor rate (PIR).
- FIF rules
- Foreign Investment Fund rules taxing offshore investments using fair dividend rate or comparative value methods.
- NZ Superannuation
- Government-funded retirement pension available from age 65; eligibility based on residency and not means-tested.
- Client interests first
- Ethical duty requiring advisers to prioritise client needs over personal or firm interests when providing advice.
- Conflicts of interest
- Situations where an adviser's personal or financial interests could influence advice; must be disclosed and managed.
- Continuing professional development
- Ongoing learning required for advisers to maintain competence and stay updated on regulatory and market developments.