Many brokers seek to get registered on the New Zealand Financial Services Provider Register (FSPR), due to the good reputation of New Zealand as a jurisdiction and also because it has a great proximity to the Asia Pacific which is a very promising and lucrative marker that brokers wish to target.
Worried that the licensing in their country is being misused by entities however, the authorities in New Zealand have made it the whole process both lengthy and demanding, while they are also contemplating further changes that will make things even more difficult for brokers. The regulators in New Zealand and more specifically the country’s Financial Markets Authority (FMA), is worried whether the entities providing financial services in New Zealand are of the proper caliber, while it is also concerned if the large volume of applicants for registration are not at all interested in operating in New Zealand but simply want the seal of its registration and intend to use it as a base for their operations abroad.
The New Zealand Ministry of Business, Innovation, and Employment (MBIE) has also published a paper in late 2015 entitled “Options Paper: Review of the Financial Advisers Act 2008 and Financial Service Providers (Registration and Dispute Resolution) Act 2008,” which deals with what they term as misuse of the FSPR and which envisions the implementation of stronger registration requirements, while also proposing the amendment of the grounds for de-registration of an entity from the FSPR. The Ministry also suggests, inter alia, the introduction of the element of territorial scope, i.e. requiring companies required to have a legitimate connection to New Zealand, that is actually transacting with New Zealand domiciled clients to be registered on the FSPR.
Moreover, the FSPR has started a rigorous effort to expunge from its register all entities that give it cause to proceed with their deregistration. According to section 18(1) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008, (1) The Registrar must deregister a financial service provider after a notice period in accordance with sections 19 and 20, if the Registrar is satisfied that the provider—
(a) is no longer qualified to be registered in accordance with section 13; or
(aa) has failed to notify the Registrar of the name, business address, and membership number, as required by section 16(1)(ab); or
(b) is not in the business of providing a financial service (at any time after the expiry of 3 months after registration); or
(c) has been registered because of a false or misleading representation or omission; or
(d) has proffered an application fee or annual confirmation fee or levy that has subsequently been dishonoured, declined, or reversed.”
The first wave of deregistrations from the FSPR came in October 2015 when a total of 155 firms and individuals got deregistered, while a second wave consisting of 66 entities and persons was announced by the FSPR on 7 January 2016.
With regulators toughening up, it is certain that brokers already on the FSPR or wishing to get their name on the register will have their work cut out for them.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.