New Zealand regulator confirms new rules for binary options

Maria Nikolova

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.

Read this next

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

Digital Assets

WunderTrading brings automated crypto trading to United States

“Among developed countries, Americans are the heaviest users of cryptocurrencies, with 13% having invested in cryptocurrencies over the past year.”

<