The New Zealand Financial Markets Authority (FMA), Te Mana Tātai Hokohoko, has released a consultation document focussed on new business continuity and technology systems regulations.
As part of a focus on operational resilience, 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.
The new ‘standard condition’ proposes that licencees 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 licencee 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 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 2023.