New Zealand forex brokers are very similar in terms of regulatory compliance compared to similar ones in countries such as Australia, the UK, and others. The state regulation of New Zealand currency brokers adopted a similar legal structure and portfolio of services that were implemented by their Australian counterparts. Thus, traders working on such platforms have more freedom in trading in the markets and do not face any restrictions that are usually applied by agencies such as NFA and CFTC.
In fact, brokers who choose to obtain a forex license in New Zealand (obtain a permit for forex brokerage in New Zealand) are more concerned about consumer welfare due to the strict regime of the relatively new state regulator FMA (Financial Markets Authority). The FMA quickly imposes fines and revokes licenses if it considers that a broker has deviated from any of the FMA requirements. The sanctions were expanded to such an extent that even honest brokers faced suspension of the license due to the fact that they could not meet the new regulatory standards.
Several licensed and trusted Forex brokers have expressed concerns about the FMA’s inability to smoothly transition from the Security Commissions guidelines (the previous New Zealand regulator), with some brokers even having their licenses canceled for no known reason. FMA restored the licenses of all reliable Forex brokers operating in the country, but to make sure that the regulatory framework was guaranteed, it made specific recommendations for all companies. Thus, New Zealand and the FMA provide the best regulatory environment for the safety of exchange market participants.
Regulators of Forex Brokers in New Zealand
The Financial Markets Authority (FMA) is the initial regulator for all foreign exchange companies in New Zeland. Brokers are also expected to enroll their business with the Financial Service Providers Register (FSPR) and the Financial Services Complaints (FSCL). Thus, for in-depth analysis of the company, Forex traders in New Zealand can always find out if the broker is genuine and regulated simply by searching the FMA, FSPR, and FSCL databases.
The FMA regulator issues periodic updates and press releases on the current state of the financial markets. The agency issues warnings and notifications of potential fraud, unregistered businesses, and brokers deprived of their licenses. New Zealand can provide Forex brokerage platforms that are similar to other popular countries, including the UK, Cyprus, and Australia.
However, if a broker loses its license due to unpredictable circumstances, in contrast to regulators such as FCA (UK) and CySEC (Cyprus), guaranteeing compensation to the investor up to $50,000, FMA (New Zealand) does not provide any compensation or insurance in the event of the liquidation of such a broker. It may prevent the participants of the forex exchange from returning part of their trading capital if the broker ceases to exist.
Most retail traders invest between $1,000 and $100,000 in foreign exchange markets, where a compensation fund aims to better protect market participants from problems with brokers. The absence of an FMA compensation fund may prevent traders from deciding to be serviced by such a broker. Criteria such as the availability of compensation funds and insurance; the high requirements that every Forex broker in New Zealand is obliged to comply with, as well as the presence of repeated cases of suspension and revocation of licenses for Forex brokers, become one of the decisive factors when deciding to obtain a license for a Forex broker in New Zealand.