The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – today released a consultation document on its proposal to introduce a new standard condition for certain financial market licence holders. The new licence
condition will focus on business continuity and technology systems.
Operationally resilient businesses are important for the integrity and availability of New Zealand’s financial markets.
The FMA wants to ensure that market service providers are prepared to respond to business continuity and cyber risks
when they emerge. As well as supporting well-functioning financial markets, this helps consumers to have confidence that
their information and investments are being properly looked after.
This consultation is relevant to the following types of market service licences:Managers of registered schemes (but not restricted schemes)Providers of discretionary investment management servicesDerivatives issuers andPrescribed intermediary services (peer-to-peer lending providers and crowdfunding service providers).
The new standard condition proposes that licensees must have and maintain a business continuity plan that is appropriate
for the scale and scope of its service, to make sure that their critical technology systems are operationally resilient.
If the licensee suffers an event that materially affects the supply of its service, it must notify the FMA as soon as
possible, and no later than 72 hours after the event.
The 72-hour period reflects the reliance on technology by the relevant licence holders and the likelihood of harm to
consumers and investors when disruptions occur. It also reflects the significance of technology in maintaining sound and
efficient financial markets.
The FMA introduced a BCP and technology resilience standard condition for Financial Advice Providers in 2020 and this
requirement is also included in the Conduct of Financial Institutions regime which comes into force in 2025.
The FMA has previously noted shortcomings in the cyber resilience and operational systems among entities it licences,
including underinvestment in technology and the use of unsupported or legacy systems.
Paul Gregory, FMA Executive Director of Response and Enforcement said: “The financial services sector is facing
increasing technological risks that make it necessary for licensees to meet minimum business continuity and technology
standards."
“This proposal continues the FMA’s roll-out of this standard condition across licence types, to reflect the importance
of ensuring licence holders can continuously provide their market services. By doing so, consumers and investors can
have confidence they can access their services and products, when and how they want or need to.”
Consultation on the proposal runs until 1 September.