New Zealand regulator confirms new rules for binary options
The annual report by the regulator states that from December 2017, any company making regulated offers of short-duration derivative products to New Zealanders settling within three days, whether based here or abroad, will require a licence.
A follow-up to FinanceFeeds’ earlier article about the new requirements for companies offering short-duration derivative products, including binary options, in New Zealand…
New Zealand’s Financial Markets Authority (FMA) today published its annual report for the year to June 30, 2017, confirming that the new requirements will take effect on December 1, 2017.
“From December 2017, any company making regulated offers of short-duration derivative products to New Zealanders settling within three days, whether based here or abroad, will require a licence. All currently unlicensed providers must have applied for a licence by 1 August 2017.”
In April 2017, the FMA changed its approach to products such as binary options and contracts for difference amid rising concerns about the harm these unregulated offers of products pose for investors. Back then, the New Zealand regulator stressed that during the preceding 18 months, the volume of complaints about online FX and other short duration trading services like binary options had remained at about 40% of the total volume of complaints it has received. The FMA has also seen the increased emergence of online trading platforms, often based in overseas jurisdictions, targeting New Zealand investors with offers of short duration derivative products.
The regulator is now reviewing how it could effectively use social media like Facebook to address potential or actual risks to consumers.
In December 2016, the FMA shared messages with consumers about the risks associated with short- duration foreign exchange derivatives, using Facebook as the preferred channel. This is because these products are heavily marketed using social networks.
The trial advertising ran during the Christmas holiday period and targeted people whose Facebook activity and profile showed an interest in trading in FX and binary options. The advertisements linked back to the FMA website and emphasized the need to avoid scams, use licensed providers and generally better understand the risk of FX and binary options. The regulator ran a second advert, for comparative purposes, between February and March 2017. The advertisements had 330,000 views by just over 50,000 people, generating more than 8,000 unique visits to the consumer section of the FMA website.
