FMA (New Zealand)

The Financial Markets Authority (FMA) is New Zealand's conduct regulator for financial markets, created in 2011 after the finance company collapses of the late 2000s. A broker offering leveraged foreign exchange or CFDs to New Zealand retail clients must hold a Derivatives Issuer licence under the Financial Markets Conduct Act 2013 — a licence, not a registration, and the difference matters more here than almost anywhere else.

Licence versus registration

New Zealand also maintains the Financial Service Providers Register, a public list any firm meeting basic criteria can join. For years offshore brokers advertised FSPR registration as though it were regulation, and the register filled with entities that had no New Zealand business at all. The FMA now has the power to deregister firms with no genuine local connection and has used it repeatedly.

The consequence for a trader is simple: "registered on the FSPR" means almost nothing, while "licensed derivatives issuer" means the FMA reviewed the business, its directors, its capital and its systems before granting permission. Any broker that leads with the former while lacking the latter is exploiting the gap, and ProForexBrokers.com scores it accordingly.

What the licence requires

A derivatives issuer must have directors and senior managers the FMA considers fit and proper, adequate financial resources, and client money held in a statutory trust account with a New Zealand registered bank. Client money in that trust account is protected by statute from the issuer's creditors. Firms must produce a Product Disclosure Statement in prescribed form, register it, and keep it current, and they must report annually to the FMA.

Leverage and retail protections

New Zealand imposes no statutory retail leverage cap. Licensed issuers commonly offer 100:1 to 500:1, which places the regime between the offshore jurisdictions and the capped markets of Europe and Australia. Negative balance protection is not mandated by statute; some licensed issuers offer it as policy.

If a broker fails

There is no investor compensation scheme. The statutory trust account is the protection, and it is a stronger protection than ordinary segregation because the trust is created by statute rather than by contract. Recovery still depends on the issuer having kept accurate records.

Verifying a licence

The FMA publishes a licensed derivatives issuers list on its own site, and it publishes warnings about firms misusing the FSPR. Look the broker up on the licence list by legal entity name, then confirm the Product Disclosure Statement on the Disclose register is current.

Who an FMA broker suits

An FMA licence suits traders who want statutory trust protection over client money without European leverage limits, and traders in Asia-Pacific time zones who want a regulator in their own trading day. It suits poorly anyone who needs a compensation scheme behind the trust account.