First ‘investment passport’ under ARFP granted to NZ fund manager

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko has approved Smartshares Limited as a passport fund under the Asia Region Funds Passport (ARFP).

ARFP is a multilateral agreement between New Zealand, Australia, Japan, Thailand and The Republic of Korea that allows investors and managed funds from those countries to do business more easily. The initiative facilitates the offering of liquid and well-diversified managed funds among the signatory economies. Smartshares is the first fund manager to be approved under the ARFP.

NZX-owned Smartshares will now be able to offer its approved fund for distribution in Australia, Thailand, Japan, or Korea according to the rules specified in the Memorandum of Cooperation (MoC).

James Greig, FMA Director of Supervision, said: “The ARFP is an internationally recognised system and it’s encouraging to see a New Zealand investment firm to be the first to be granted a passport.

“The Financial Markets Conduct Act balances innovation with robust regulation and has allowed New Zealand to participate in the agreement, which opens new markets for New Zealand’s fund managers and should broaden investment options available to New Zealanders,” Mr Greig said.

About the AFRP

ARFP was launched on 1 February 2019. Local schemes can apply to be registered as a passport fund and foreign passport funds can apply for permission to offer their funds in New Zealand. This means that fund managers from New Zealand, Australia, Japan, Thailand and Korea can offer eligible products to investors in each other’s economies, bringing more choice and competition to managed fund markets in the Asia/Pacific region.

In preparation for the multilateral arrangement, the FMA, the Ministry of Business, Innovation and Employment (MBIE), and Companies Office – with input from various industry participants – have introduced changes to the country’s Disclose register and developed new forms, systems, processes and guidance. New regulations have also been developed under the Financial Markets Conduct Act.

Fund managers wanting to offer passport funds in New Zealand – and New Zealand fund managers wanting to offer funds offshore – need to apply to the FMA and the relevant overseas regulator for approval.

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