FMA — Financial Markets Authority
New Zealand conduct regulator since 2011; derivative issuer licence, no leverage cap
- Max retail leverage
- No statutory cap
- Compensation limit
- Not applicable
- Negative balance protection
- Not required
About the FMA
The Financial Markets Authority was created in 2011, replacing the Securities Commission after the finance company collapses of the late 2000s, and now supervises conduct across New Zealand financial markets under the Financial Markets Conduct Act. A firm issuing CFDs or margin FX to retail clients needs a derivative issuer licence, which requires demonstrating capability, governance, financial resources and appropriate risk management, and must produce a product disclosure statement lodged on the Disclose register. Licensed issuers are supervised, report to the FMA and can have conditions imposed or their licence cancelled.
There is a persistent confusion between two different things. Registration on the Financial Service Providers Register is an administrative step, not a licence, and for years offshore firms with no genuine New Zealand business registered there to acquire the appearance of a respectable jurisdiction. Legislative changes gave the registrar power to refuse or deregister entities without a real connection to New Zealand, and many were removed, but the distinction still matters. What counts for a retail derivatives client is whether the entity holds a derivative issuer licence, not merely an FSPR entry.
The retail product regime is light by tier one standards. There is no statutory leverage cap and no requirement to offer negative balance protection, so both are commercial decisions by the issuer. Retail investor money must be held in separate trust accounts with a New Zealand registered bank, and those arrangements are subject to annual assurance reporting. New Zealand has no investor compensation scheme, so segregation is the practical safeguard against issuer failure. Every licensed provider must belong to an approved dispute resolution scheme, giving clients a free route to an independent decision.
Why we rate it tier 2
Derivative issuer licensing, trust-account segregation and mandatory membership of an approved dispute scheme are real protections, but no leverage cap, no negative balance protection mandate and no compensation scheme, plus a register long exploited by offshore firms, keep it below tier one.
Real supervision and a public register, but thinner capital requirements, a smaller compensation ceiling, or a retail regime that leans on the home regulator of a passported entity. Perfectly usable, with more homework required.
FMA protections at a glance
| Full name | Financial Markets Authority |
|---|---|
| Jurisdiction | New Zealand |
| Region | Asia-Pacific |
| Established | 2011 |
| Maximum retail leverage | No statutory cap |
| Leverage regime | New Zealand sets no statutory retail leverage cap for derivatives. Derivative issuers set their own limits, so leverage can be far higher than in Australia or the EU. |
| Investor compensation scheme | None |
| Compensation limit | Not applicable |
| Negative balance protection | Not required — Negative balance protection is not required by law; some derivative issuers offer it voluntarily, so the product disclosure statement and client agreement must be checked. |
| Client-fund segregation | Licensed derivative issuers must hold retail investor money in separate trust accounts with a New Zealand registered bank under the Financial Markets Conduct Regulations, with annual assurance reporting on those arrangements. |
| Complaints route | Complain to the issuer, then take the matter to the approved dispute resolution scheme the firm must belong to, such as the Insurance and Financial Services Ombudsman or Financial Services Complaints Ltd. |
| Public register | Financial Service Providers Register (FSPR) (fsp-register.companiesoffice.govt.nz) |
What to check on the Financial Service Providers Register (FSPR)
- 1Search the entity on the Financial Service Providers Register at fsp-register.companiesoffice.govt.nz.
- 2Confirm the record shows a derivative issuer licence, not merely FSPR registration.
- 3Note the approved dispute resolution scheme named on the register entry.
- 4Find the product disclosure statement for the product on the Disclose register and check leverage and negative balance terms.
- 5Check FMA warnings and enforcement pages, and confirm the contracting entity is the licensed New Zealand company.
Register: fsp-register.companiesoffice.govt.nz. Always navigate to the register from the regulator's own domain rather than a link supplied by the broker.
Brokers on PipDig regulated by the FMA
None of the brokers currently reviewed on PipDig hold a FMA licence. That is not a mark against the authority — our review coverage follows where readers actually open accounts, and it changes as we test more firms.
FMA FAQ
Is FSPR registration the same as an FMA licence?
No, and the difference is the single most misused fact about New Zealand regulation. FSPR registration is an administrative listing. Issuing derivatives to retail clients requires a derivative issuer licence granted by the FMA after an assessment of capability, governance and financial resources. Always check the register entry for the licence, not just the registration.
Is there compensation if a New Zealand issuer fails?
No. New Zealand has no investor compensation scheme for the failure of a derivative issuer. The protection is the requirement to hold retail investor money in separate trust accounts with a New Zealand registered bank, subject to annual assurance reporting. In an insolvency, recovery depends on how well those trust arrangements were maintained.
Why is leverage higher than in Australia?
New Zealand has not adopted a product intervention measure equivalent to the Australian order that caps retail CFD leverage at 1:30. Licensed derivative issuers set their own limits, and negative balance protection is not mandated either. Read the product disclosure statement for the specific leverage, margin close-out and negative balance terms before opening an account.