Valuation of assets

35. There is no specific regulatory requirement relating to the frequency of publication of subscription or redemption prices for Registered MIS. The FMA considers that the appropriate timing for valuation of scheme property depends on the structure of the MIS, the nature of the assets and the investment strategy of the MIS, as reflected in its SIPO. However, for Managed Funds, the FMC Act requires that the MIS manager must calculate and disclose the NAV of each fund at least quarterly (in the Quarterly Fund Update that is lodged with the Disclose Register). In practice, many of these funds calculate and disclose their NAV on a daily basis.

36. MIS managers must ensure that all valuations are made in accordance with the relevant valuation methodology specified in the governing document. MIS managers must ensure that they have documented methodologies to value each type of asset, that they apply methodologies consistently across similar asset classes and review them periodically, that assets are valued regularly and independently by staff with the right skills and that any conflict of interest is addressed. The MIS manager minimum standards require that the asset valuation function will be carried out independently of the investment management function. They also expect that if there are particular risk factors (e.g., conflicts of interest), these should be considered and addressed in the asset valuation methodology. The methodology and the rules applying to the valuation of assets for each Registered MIS and the pricing of its units must be detailed in its governing document, which can also be accessed at the Disclose Register. Where any asset type is not covered by any specific valuation methodology, it is to be valued according to New Zealand GAAP (which is equivalent to IFRS, see below).

37. While there is no prescribed requirement to use forward pricing, MIS managers are expected to do this in compliance with their Overarching Duties as Managers.¹⁸ As noted above, MIS managers would reflect pricing methodologies in the SIPO and governing document. They are required to ensure that in implementing these they act in the best interest of the scheme participants and treat such participants equitably when exercising any of their powers or duties as MIS managers. The licensing minimum standards for MIS managers include a requirement that the MIS manager has policies and processes in place to prevent arbitrage. The FMA understands this would prevent them from calculating the price for effecting purchases and redemptions of MIPs at historic NAV. Supervisors should also be expected to raise this as an issue if any of the MIS managers they monitor use this method for calculating unit prices. In practice, the FMA is not aware of any MIS manager using historic NAV.

38. MIS managers are allowed to use an external valuer and many outsource this function. Where the MIS engages an external valuer to carry out this function, it must ensure that the engagement is conducted in accordance with the requirements of the FMC Act and the minimum standards for MIS managers’ licensing. The MIS manager must monitor the performance of the external valuer and retains ultimate responsibility for the performance of those functions.

39. There are no specific regulatory provisions for the valuation of Money Market Funds (MMFs). The regulatory regime does not provide for a definition of MMF or for any provisions on the valuation of these types of funds.¹⁹ There seems to be a very limited number of MIS invested in debt securities and seeking to provide daily liquidity that are offered with the aim of maintaining a constant NAV.²⁰ It appears that market practice would be to provide certain additional liquidity safeguards for these funds like a relatively longer notice period for redemptions and the ability to set limits or delay redemptions in specific circumstances.

Management of redemption risk

Use of leverage

53. There are no regulatory restrictions or limits on the use of leverage by a Registered MIS. MIS managers are able to use leverage provided that this is (i) provided for in the governing document of the MIS and SIPO; (ii) disclosed to investors in the PDS/Register Entry; and (iii) undertaken in accordance with the Overarching Duties of Managers to act in compliance with a professional standard of care. Also, where leverage is permitted, the FMA considers that it is generally appropriate to provide limits on its usage. These limits would also be established in the SIPO and governing document.

54. Supervisors monitor the use of leverage by Registered MIS managers. Supervisors must ensure that the MIS manager is complying with the MIS’ governing document and SIPO and that it is providing accurate disclosure on the use of leverage to investors. For these purposes, Supervisors receive regular reporting from managers and custodians and these reports are reviewed against the SIPO to ensure all investments are permitted and do not break restrictions. The Supervisors are also expected to undertake ongoing monitoring of the policies, processes and controls the MIS manager has in place to ensure compliance with the SIPO and that any leverage is appropriately disclosed to investors.

55. There is a general perception that leverage is minimally used by New Zealand MIS managers, but available data is limited. Many governing documents contain the possibility of using leverage, both through borrowing–which would be permitted on a short term basis only, to effect redemptions on the fund–or through the use of derivatives. However, for those MIS that can use leverage, self-imposed limits tend to be very conservative (generally up to 20 percent of the NAV). Through the information obtained during the licensing process, the FMA’s perception is that the actual use of derivatives by MIS managers is very limited (other than for hedging purposes) and limited to a few funds. Under the FMC Act MIS managers must report their derivatives positions as part of their portfolio composition every six months, which will give the FMA an initial sense of the actual use of synthetic leverage by New Zealand Registered MIS.

56. Even in the absence of prescribed limits, the use of leverage by New Zealand MIS managers seems quite conservative. The self-imposed limits on leverage are primarily monitored by the Supervisors through their initial review of the SIPO and the ongoing monitoring of the manager’s compliance with their investment strategies. The FMA should assess the data on holdings that will be reported by the MIS managers of Registered MIS and the Supervisors’ review of MIS’ use of leverage to have a better perspective on the extent to which leverage is used within the MIS population and be able to monitor any significant increase.

Safekeeping and segregation of fund assets

57. The FMC Act requires that the assets of MIS are segregated from those of the MIS manager. The property of a Registered MIS must be held by the Supervisor, who can in turn delegate custody to an external custodian if permitted by the MIS governing document. Assets must be held separate from the assets of the Supervisor or custodian and are protected from the insolvency of any of those entities. When delegating the provision of custody services, the Supervisor must ensure that the function is performed in the same manner as if the Supervisor was performing it directly and monitor such performance. Where the holding of scheme property is contracted out to an external custodian, the Supervisor remains jointly liable for the performance of the custody function.

58. External custodians that provide services in relation to MIS do not need to be licensed entities and are not subject to any prudential requirements. To be eligible to be appointed as an external custodian of a Registered MIS, a firm must (i) be a legal entity that the Supervisor believes to be appropriate to hold and safeguard MIS assets and (ii) be functionally independent of the MIS manager. In practice, a number of New Zealand custodians are subsidiaries of Supervisors. They are permitted to use omnibus accounts to register assets of each fund on behalf of investors. Detailed account of the units held by each individual investor will be kept by the MIS manager or the fund administrator.

59. The FMA has no direct oversight of the activities of custodians. Whether custody services are provided by a licensed Supervisor or an external custodian, these operations do not need to be separately licensed. Therefore, the FMA cannot directly oversee the custody functions carried out by Supervisors or third party entities. The FMA has some indirect insight into these activities through monitoring of the Supervisors. In particular, it can get a sense of the governance and culture within those Supervisors that also provide custody services and that share reporting lines. It will also monitor the Supervisor’s processes, approach and criteria applied when approving and monitoring the performance of custodians, which indirectly may provide certain information on the operations of the latter.

60. Given the fact that custodians perform key functions regarding safeguarding investors’ assets, consideration should be given to reviewing the perimeter of regulation to require them to be licensed. Aside from an indirect oversight through the monitoring of Supervisors, the FMA has no visibility of custody activities for MIS. Custodians are not prudentially supervised by any other authority in New Zealand. IOSCO’s Standards for the Custody of CIS’ assets recognize the fact that most regulatory regimes require CIS custodians to be licensed, authorized or approved and be subject to some form of ongoing regulatory oversight.

MIS managers

63. MIS managers are subject to comprehensive licensing requirements. Any person acting as the MIS manager of a Registered MIS must be licensed by the FMA. In order to issue a license, the FMA must be satisfied that the MIS manager has met all of the relevant requirements in the FMC Act and Regulations (Eligibility Criteria). The FMA has also published a Licensing Application Guide which sets out a series of minimum standards for MIS managers covering legal requirements, fit and proper, capability, operational infrastructure, financial resources and governance. The FMA expects all applicants to explain how their approach is appropriate to meet the minimum standards and Eligibility Criteria for the size and nature of their business.

64. The FMA also has the ability to impose additional license conditions on a MIS manager. If the applicant is issued a MIS manager license, it must continue to meet eligibility criteria on an ongoing basis. It will also be subject to standard license conditions for the provision of its services. The FMA may also set additional specific conditions for individual managers on a case-by-case basis. Some are imposed on a transitional basis and reflect the significant step up that is made by applicants to transition into the new regime. These conditions will be reviewed as part of follow up monitoring.

65. MIS managers also need to meet applicable licensing requirements for outsourced functions. MIS managers can outsource some of their functions, like investment management and/or administration, while remaining responsible for discharging those functions, as there is no separate requirement for the external provider to be licensed.²⁶ Where a function has been outsourced the MIS manager will remain responsible for meeting any relevant Eligibility Criteria and minimum standards. The FMA assesses any delegation arrangements as part of the licensing process for the MIS manager, verifying that the manager has: appropriate processes to ensure that the external provider is capable of effectively performing the outsourced function to an acceptable level, legal arrangements to enable effective monitoring and to ensure records will be available for inspection by the FMA on request, and a performance program to monitor the provider’s performance. MIS managers are required to report any material changes to outsourcing arrangements to the FMA, which will allow the FMA to continue to monitor the manager’s ability to satisfy its statutory duties and licensee obligations.

66. To be able to assess managers’ ability to perform their functions at the licensing stage, the FMA has done a high-level sample review of governing documents for some MIS. As part of the review of a MIS managers’ processes and capabilities, licensing staff looked through a sample of SIPOs and governing documents for MIS managed by each manager. This has provided the FMA staff with an overview of some of the types of funds each manager would offer and how the manager’s resources and expertise match the complexity of the products offered. It has also provided an indication of whether the processes of the managers are fit for purpose for the investment strategies offered, (e.g., for the management of liquidity risk, use of leverage and valuation of assets).

67. The FMA considers licensing a confirmation of compliance with minimum entry-level standards. By issuing a license to a MIS manager, the FMA recognizes that the processes, procedures and operational conduct of the MIS manager meet the entry-level expectations, while the aim of the FMA is to raise standards over time, through its supervisory/monitoring process and industry engagement.

Supervisors of MIS managers

68. To license a Supervisor, the FMA must be satisfied that the applicant is capable of effectively performing its functions. The FMA’s assessment covers fit and properness, capacity, resources, controls and processes, governance, and independence. A significant part of the review focuses on the applicant’s compliance monitoring and how the applicant will ensure that the MIS managers it oversees will comply with their obligations. Additionally, the FMA must be convinced about the Supervisor’s independence from the MIS manager. It considers any relationship that the Supervisor or its directors and senior managers may have with the MIS manager or any other businesses or relationships of the Supervisor or its associated persons that may compromise its independence.

69. The licensing regime for Supervisors has been in place for five years. Over this time, the FMA has engaged with Supervisors regularly, through industry meetings and ongoing monitoring, which has resulted in a progressive improvement of standards.

MIS

70. MIS are not subject to licensing, but are registered on the Disclose Register. Before being able to make a Regulated Offer, the MIS manager must register the MIS on the Disclose Register. For these purposes the MIS manager must prepare a PDS and supply the Registrar with all the information that the register entry for the MIS is required to contain – such as any governing documents and the SIPO.

71. While compliance with the registration requirements of the FMC Act is assessed by the Registrar, the FMA carries out pre and post lodgement reviews of offer documents. The pre-lodgement review process is not a legal requirement. The process is aimed at ensuring that offer documents are likely to meet FMA’s expectations and to assist with meeting the new requirements of the FMC Act. Once an offer is lodged on the Disclose Register, the FMA rates it and reviews it in accordance with its risk estimate model described above. Where the FMA finds that an offer document is potentially non-compliant with regulations, it will contact the MIS manager and seek to have the query resolved or documents withdrawn or amended.

72. The review of MIS offer documents has provided valuable market information to the FMA on the industry’s approach to and disclosure of risk. In the period from the introduction of the FMC Act until 1 December 2016, the FMA has reviewed the PDS of 109 MIS that have registered on the Disclose Register. As this is the first time MIS have had to be registered, the FMA has taken the opportunity to engage with the industry on the expected standards of offer documents for MIS. As part of the process of reviewing the PDS for MIS, FMA staff have met with the MIS managers where needed to discuss the quality of the content and, in particular, the approach to risk under the new regime and the expectations for MIS managers when disclosing those risks to investors. This review has also provided FMA staff with a better understanding of the MIS offered by MIS managers and will likely assist in the supervisory process going forward.

73. The FMA has comprehensive and well documented processes for the licensing of MIS managers and Supervisors and is appropriately resourced to carry out that function.

74. The FMA should continue the pre-lodgment review of MIS offer documents. The FMA has made a significant effort undertaking the pre-lodgment review of MIS offer documents and we understand this review will be continued. This review will assist the FMA in ensuring that MIS offer documents are in line with the FMC Act, being able to address any issue before lodgment. Also, as mentioned, the sample review of governing documents and SIPOs for newly registered MIS has proven to provide very relevant information to the FMA. Going forward, the FMA should consider reviewing SIPOs and governing documents for new MIS. While this is still a primary responsibility of Supervisors, it would be important for the FMA to take a more hands-on approach as these documents govern many relevant topics. Presumably, the FMA can approach the review from the point of view of systemic risk implications while Supervisors will tend to focus more on issues relevant to the protection of unit holders.

Organization and resources

75. The supervision team is responsible for the monitoring of fund management related activities. This team currently has 24.9 full-time employees (FTEs) responsible for the ongoing monitoring of all entities under the supervision of the FMA, including MIS managers, Supervisors and LITs. As mentioned above, the staff of the supervision team has also been involved in licensing of MIS managers to gain a better understanding of the asset management industry.

Supervisory approach

76. The FMA applies a risk-based approach to supervision, aiming to focus on those participants that pose the greatest risk of adversely impacting fair, efficient, and transparent financial markets. The FMA’s monitoring priorities are guided by top-down and bottom-up considerations:

• Through reviewing its Strategic Risk Outlook (SRO), the FMA takes a top down approach to identifying market risks and assessing potential harms.

• Within each sector, the FMA reviews the information gathered from licensing, monitoring, reporting, complaints and thematic reviews and interaction with market participants and uses this information to estimate the level of risk associated with market participants, assisted by the use of risk estimate models (REMs).

77. The inputs into the REMs include quantitative data and qualitative assessments. Inputs are collected from different sources, including all of the reports and notifications that the FMA receives from market participants. The REMs also include qualitative assessments from monitoring work and thematic reviews conducted by the FMA. The risk factors are scored and weighted to give a result for consequence and likelihood (of failure to meet licensing and/or regulatory obligations), and a final risk score. The REMs and their processes are continuously refined and are being influenced by the experience gained by the FMA through the recent licensing of firms under the FMC Act. The FMA is currently finalizing the REMs for MIS managers (post licensing) and expects to be able to start using those to assist in the determination of the future supervisory cycle of the new licensees.

78. Supervisory activities of MIS encompass four broad areas:

• Monitoring provided by Supervisors. Supervisors provide the frontline monitoring of MIS managers, and are expected to identify and assess risks posed by them, understand and monitor how these risks are mitigated and act to require the MIS managers to take additional steps where needed. The obligation on Supervisors to oversee MIS managers does not prevent the FMA from also monitoring the same MIS managers where the FMA considers that appropriate. Additionally, the FMA has an ongoing oversight role relating to Supervisors, which it carries out through assessment of periodic and ad hoc reporting, on-site visits and assessment of market trends.

• Periodic monitoring and inspections. In the near term, the FMA’s planned monitoring will be undertaken on the basis of the priorities identified during the licensing process. This monitoring can entail a mix of on-site visits, desk-based reviews and telephone interviews.

• Thematic reviews. Thematic reviews use a combination of FMA’s resources, including data gathering and analytics, desk based research and on-site activity. They typically result in a Board paper, report to the market and possible market guidance. The FMA’s target is to complete at least five thematic reviews per year. Recent areas of coverage include sales and advice by financial service providers (including KiwiSaver providers) and corporate governance disclosure.

• Reactive monitoring and inspections. The FMA can also undertake reactive supervision in response to feedback from the market, complaints from investors, reporting from Supervisors or referrals from co-regulators or overseas regulators.

79. As explained in Section B above, several relevant aspects of fund management activities are subject to direct ongoing oversight by the Supervisors. The approach to liquidity risk management (including stress testing, suspension of redemptions, etc.), valuation of MIS assets and segregation and custody of assets are issues that are particularly relevant to the stability of the financial sector and where significant risks could arise. Under the FMC Act regime, these are to be monitored directly by the Supervisors through their oversight of compliance with the SIPO and governing documents. However, the FMA retains supervisory capacity over all aspects of MIS management, irrespective of whether these are to be primarily overseen by Supervisors.

80. The supervisory strategic priorities for the next fiscal year will focus on newly licensed MIS managers. Leveraging on recently acquired visibility of the MIS manager population through the licensing process, the FMA will focus on undertaking follow-up monitoring of any MIS manager identified as high risk. The FMA will monitor those MIS managers with short dated or prerequisite conditions, as well as those that have been required to comply with additional specific conditions in the licensing process. Monitoring work to assess compliance with these conditions will also be undertaken under a risk-based approach.

81. The FMA has a broad range of investigation and enforcement powers. The investigation powers range from the ability to obtain information, documents and evidence to the power of entry and search under a search warrant granted by the court and also includes broad powers to share intelligence and information with domestic and foreign counterparts. The FMA also has overarching powers to take remedial action in case of breaches of securities regulation, including the ability to impose remedies on supervised entities in relation to contravention of licensee obligations, the power to make stop orders or direction orders, issue warnings and to bring both civil and criminal proceedings against any person under a variety of acts.

82. Investigations can result from information provided by a number of sources, which the FMA is in the process of systematizing. Investigation activity can arise from information provided by FMA operational teams, frontline supervisors (Supervisors and the NZX), complaints and other government agencies. The FMA is currently developing a new framework to process the collection, handling, analysis and response to all the information received or generated across the FMA. The system, called the Information and Contacts Management Framework, is intended to facilitate the assessment of information to determine the need for further action.

Use of supervisory and enforcement tools

83. Due to the novelty of the FMC Act regime, supervisory record for MIS activities is still limited. The transition period for the FMC Act expired on December 1, 2016 and the majority of MIS managers have only recently entered the FMC Act regime. Nevertheless, the FMA has undertaken some reactive monitoring reviews of MIS managers where issues have come to its attention.

84. The FMA has a relatively longer track record of monitoring Supervisors. Since the licensing regime for Supervisors came into effect in 2011, the FMA has proactively inspected each licensed Supervisor to follow up on the matters of specific concern and relevance identified in their initial licensing process. After this initial round of on-site inspections in 2013–2014, the FMA has adopted a more risk-based approach to Supervisors and while it carries out regular reviews of their approaches and responses received through reporting requirements, on-site inspections of Supervisors have been pared back to an average of inspecting 2 Supervisors per year. Priority is given to areas where there have been previously identified concerns or where new issues may have been identified through licensing of MIS managers.

85. Given the significance of Supervisors for the FMC Act regime and the novelty of regulations, the FMA has intensely monitored their activities during the first years under the new regime. Under the old regime, Supervisors were trustees for different types of issuers, and carried out a role which was based on review of documentation and compliance with governing documents. The transition to the new regime under the Financial Markets Supervisors Act 2011 and, further, the introduction of the MIS regulatory framework, has changed the role of the Supervisor. As a result, Supervisors are now expected to identify and assess the risks posed by the entities they supervise, as well as to monitor the steps taken to mitigate those risks. The FMA will continue to monitor and engage closely with Supervisors and has signaled to them that it expects their standards to continue to improve.

86. The FMA has a significant track record of enforcement action. FMA’s investigation and enforcement activities since its establishment largely focused on dealing with the failure of many finance companies during the Global Financial Crisis. With this legacy enforcement action now almost complete, the FMA’s future workload has begun to reflect its transition to a risk-based conduct regulator.²⁷ Since the FMC Act came into force, the FMA has been able to use the wider range of investigation and enforcement tools the new regime provided, already presenting a comprehensive use of the toolkit.²⁸ The FMA has been using the regulatory powers in a manner that is proportionate to the harm, the alleged conduct and other public interest factors.²⁹

87. When defining its supervisory approach to MIS managers, the FMA should consider retaining direct monitoring of those aspects that are most relevant to financial stability, while leveraging on the oversight provided by Supervisors. To maximize the value added by the role of the Supervisors, it is important that the FMA determines what its expectations are in relation to the oversight provided by them and periodically reviews compliance with these expectations as Supervisors and the MIS industry continue to mature. In setting those expectations, the FMA should ensure that there is appropriate oversight of MIS managers’ activities that are most relevant to financial stability. This could be done by conducting thematic reviews of specific issues or by making sure that on-site inspections dedicate enough attention to the review of these topics. The supervisory approach should leverage on the Supervisors’ knowledge of the business of MIS managers to ensure that any potential risks are monitored. In addition, the FMA should ensure it maintains a level of oversight of Restricted MIS that is appropriate to the relatively less stringent regulatory framework for these entities.

88. The FMA should continue to engage with Supervisors to ensure that they take a consistent approach to their supervision of MIS and that this is aligned with FMA priorities. Supervisors should approach monitoring of MIS managers in a way that is appropriate to the MIS managers’ business models and the risks they may pose, but also with a certain level of consistency across the industry. Going forward in the supervisory cycle, the FMA should make sure that it continues to engage with Supervisors to discuss policy positions and supervisory priorities.

89. In particular, appropriate supervision of functions delegated by MIS managers should be ensured. The FMA has indicated that the review of outsourcing is likely to be an early theme of monitoring after the FMC Act transition period, which we would strongly encourage. The FMA should particularly assess the extent of delegation and the qualifications of the entities performing delegated functions. Attention should also be given to existing cross-border outsourcing of investment management functions as this would be relevant for the development of any needed supervisory cooperation arrangements going forward.

Reporting

90. New Zealand MIS managers are subject to comprehensive periodic reporting requirements. The majority of reporting obligations require that MIS managers report to the Supervisor, including changes to the SIPO, pricing errors, serious financial problems, or related party transactions. More significant changes to the MIS or the MIS manager, like probability of an insolvency event or resigning of an auditor, may also trigger a report to the FMA. For Managed Funds, the MIS manager must provide quarterly fund updates, including information on the risk profile of the fund and the actual portfolio composition at the end of the quarter, its target investment mix and the top 10 investments and their relativity to the net asset value of the fund.

91. The Supervisors can also prescribe the type of information they require MIS managers and custodians to provide, in order to monitor their activities. This typically involves monthly reports from MIS managers and custodians to the Supervisor on portfolio composition, transactions, use of leverage, value of assets, etc.

92. Deviations from the terms of the mandate of MIS managers must be reported to the Supervisor as a limit break. The governing document and SIPO must set the investment approach for a MIS, including in most cases benchmark asset allocation ranges and investment limits. A limit break would occur if there was a material breach of either: (i) the nature or type of investments that may be made or (ii) the proportion of each type of assets that may be invested in. Any limit break not corrected within five working days must be reported to the Supervisor and the MIS manager must also provide the Supervisor with a quarterly report on all material limit breaks occurred in the period. Where a limit break reflects a material issue with the operational conduct of a MIS manager, it has to be reported to the FMA.

93. The FMA can require MIS managers and Supervisors to provide additional information or more frequent reporting. This is typically done through the use of license conditions, imposed by the FMA to require additional periodic or ad hoc reporting from the MIS manager, either as a standard condition or on an individual basis where the FMA considers that the manager requires higher levels of scrutiny in light of the nature of the business and ongoing compliance and governance structures.

94. In addition to license conditions, the FMA can request the provision of specific information in the form of a regulatory return. This tool is currently being developed by the FMA and it will aim to gather information that will enable the FMA to update and improve its risk assessment of licensed entities, as well as to monitor risk in areas where regulation is relatively light and where the FMA has decided to monitor market activity before imposing additional regulatory requirements. To determine the content of regulatory returns, the FMA is mapping the information that it already receives or has available under the new regime, the information collected through the licensing process or from other sources and identifying any relevant gaps that would need to be filled by periodic returns. It expects to finalize this process in the following months and submit the draft returns for industry consultation.

95. KiwiSaver schemes are subject to additional reporting requirements. These requirements include producing an annual return including prescribed statistical information on top of the general reporting requirements for Registered MIS described above, as well as providing a notification to the FMA of any fee increase in relation to any fees for services of a KiwiSaver scheme.

96. Supervisors also have certain reporting requirements related to their own conduct. Aside from reporting on MIS managers’ operations as required, the Supervisors have to deliver regular operational reports of their own conduct to the FMA at least every six months. These reports provide a summary of the Supervisor’s compliance with the terms of its license and of its interactions with the MIS managers it supervises as well as any relevant change in the Supervisor’s circumstances. Supervisors must also certify that they continue to have sufficient financial resources and independence to support their operations and hold adequate professional indemnity insurance.

97. The reporting regime is quite comprehensive and includes significant reporting to the Supervisor. While data at the time of this mission was relatively limited due to the novelty of the licensing regime, information to be received from MIS managers under the reporting requirements of the new regime will provide the FMA with a more accurate picture of the industry. When developing the content of additional regulatory returns, the FMA should also consider what information is already being reported to the Supervisor to avoid duplications. It may also be worth considering whether the information reported to Supervisors and FMA should be provided on a compatible format to permit better analysis of the information.