FMC Market Index Exemption Notice to be renewed and extended to cover "single asset" funds

In March, the Financial Markets Authority (FMA) consulted on the proposed renewal and extension of the Financial Markets Conduct (Market Index) Exemption Notice 2018, which provides relief for funds with assets that do not have an appropriate market index.

The FMA has now announced its decision to:

• renew the exemption for an additional five years; and
• extend the exemption to allow exempt funds investing in “single assets” (such as cryptocurrency or commodities) to use alternative indices.

The existing exemption is due to expire on 16 July 2024 and the FMA will finalise a new notice to take effect before that date.

You can read more about the exemption in our previous update on the March Consultation here.

Absolute return indices

The FMA has previously expressed its view that the policy of the market index exemption does not support the use of absolute return indices, such as a cash rate plus margin index. Consistent with that view, there is no indication that the use of absolute return indices will be supported under the renewed and extended exemption notice.

Please get in touch if you have any questions or would like any assistance with the current or upcoming exemption notices.