The Financial Markets Authority (FMA) – the New Zealand financial supervisor – has published a statement on Monday, which confirmed its plans to require all brokers offering spot forex, CFD and binary options trading to obtain a derivatives license in the country. By these days, all the‘short-term’ derivatives trading was exempt from FMA licensing.
The move, marking a change in position for the fairly lax regulator, comes after more than 40% of all retail trader complaints to the FMA over the past 18 months revolved around FX and Binary Options brokers, mainly from abroad, which have been mistreating New Zealand customers.
The FMA has issued a Consultation Paper on the issue, asking for feedback from brokers and traders by April 28. However from the language contained in both the FMA’s press release and Consultation Paper it seems as though the FMA considers the rule change to be a done deal.
The FMA plans to enact the new rules as of December 1, but expects all brokers not yet licensed (and who want to serve New Zealand customers) to apply for the license as of August 1.
Although they haven’t formally been required to do so until now, a number of leading international brokers have already applied for and received the New Zealand Derivatives Dealer license, such as Plus500.
The FMA did not mention any restrictions that it might place or licensed brokers, such as leverage or bonuses, which been limited and banned recently by other financial regulators such as the FCA in the UK and CySEC in Cyprus. The FMA did state that the new rules would not apply to”ordinary” spot FX contracts, where the transaction would physically settle in the new currency.
The FMA’s statement regarding the new licensing requirement can be seen here. The FMA’s consultation paper can be seen here (pdf).
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