New Zealand regulator overturns de-registration appeal by Forex firm FXBTG Financial Limited
All of FXBTG’s clients were based overseas, and the company did not provide financial services to New Zealand customers.
New Zealand’s Financial Markets Authority (FMA) today announces that a High Court ruling has upheld a direction by the regulator to de-register foreign exchange firm FXBTG Financial Limited.
In June, the FMA directed the Companies Office, as the registrar of the Financial Service Providers Register (FSPR), to de-register FXBTG because the company was not providing financial services to New Zealand customers.
Justice Francis Cooke, who issued the judgment dismissing the appeal, said certain sections of the Financial Service Providers Act were inserted to deal with entities that register on the FSPR to “artificially claim a reputational benefit by association with the financial services regime operated under New Zealand law”.
“This case appears to me to be the classic situation the provisions were enacted to address,” the judge said, noting all of FXBTG’s clients were based overseas.
“FXBTG technically engages in financial services within the meaning of the Act, but only in an entirely notional way. It has a single employee operating a computer in an apartment in Auckland, and on that basis, it has represented it is regulated under New Zealand securities law. That creates a misleading impression.”
Nick Kynoch, FMA General Counsel, explained:
“Registration on the FSPR does not necessarily mean that an entity is regulated by the FMA. However, where we see entities exploiting registration we won’t hesitate to use our powers. The FMA has to preserve the integrity of New Zealand’s financial markets so it’s important that we defend these cases. We’re pleased that this ruling further reinforces the approach that the FMA has taken.”
This marks the fourth time the FMA had successfully defended an appeal against a direction to deregister. Previous FSPR de-registration cases the FMA has successfully defended include:
- Excelsior Markets Limited;
- Innovative Securities Limited;
- Vivier & Company Limited (The High Court granted an appeal by Vivier but this was overturned in the Court of Appeal).