Following a report last month by Forex Magnates, the New Zealand FSP has now begun to set in place its restructure of the rules by which financial services companies operate in accordance with the New Zealand FSP’s requirements.
Until this new ruling was passed, many forex companies and financial services providers were able to register themselves with the New Zealand FSP without having to have a physical office in New Zealand, making it a very straightforward and quick method of gaining registration and was attractive to financial services providers and forex companies operating in other parts of the Asia Pacific region where there is large customer demand for affiliation with a government body within a territory with a respectable financial history and business ethic.
Subsequent to the implementation of this new ruling, a total of 250 companies who were registered service providers have had their registration removed resulting in potential loss to these entities of approximately $5,000,000 in fees paid for registration to the service. A large proportion of these are based in mainland China and using the New Zealand FSP registration as a method of demonstrating credibility without having the expense and logistical issues of running an extra office outside of China.
The New Zealand FSP has ruled that service providers need to maintain a physical office in New Zealand which is compliant with the Companies Act 1993 for Registered Office purposes. The office must also be considered a physical place of business in accordance with the FSP legislation. Virtual office solutions and mail forwarding addresses no longer qualify. An FSP is also required to file annual returns to the Companies Register as well as to the FSP Register.
In this vein, the few companies which had the foresight to establish an operational base in New Zealand in order to conduct their business in the Asia Pacific region will indeed be stood in good stead. One company which has done just that is Blackwell Global.
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Established in 2010, the company based its entire Asia Pacific division in Auckland, New Zealand and therefore remains compliant with the ruling as well as being well placed to advise the authorities on future directives which will form the regulatory requirements.
Speaking on this matter, co-CEO and co-founder Michael Chai explained: “We had been scouting around for an ideal location for our headquarters. New Zealand was identified and singled out for strategic purposes. It has always been considered as one of the best in terms of business climate. It is also a marketing haven, with the country placing an important and equal emphasis on economics, commerce, education, and culture. Many big companies originated in NZ. What’s lacking is a well-known financial institution, so we seized the opportunity and filled that gap. It helps that it was an opportune time for entering NZ because they are starting to firm up the regulatory scene and Blackwell Global was there at the right time and place to help with the process. We are still working closely with the New Zealand authorities in this aspect, a fact we are very proud of. We are fortunate to have the first-mover advantage.
We recognize the need to set up offices in locations that have a high demand for brokers, but we also see the value of doing things unconventionally. Just like how there are traditional traders who believe in traditional regulatory bodies, there are also new investors who are adverse to the Europe crisis and who think highly of NZ entities.
In Asia Pacific, there are both conservative traders and the adventurous traders, especially since there are lots of burgeoning markets, China being one of them. What we did additionally, was station ourselves at pole positions, quite literally and figuratively. In this way, we provide both regulations that support the northern and southern hemisphere, thus offering more choices for our clients in both China and Asia Pacific.”
“Blackwell Global believes that regulations across the financial services sector in the Asia Pacific are tightening. In the long run, companies that operate legally will prevail over those firms that try to circumvent the law, and by no means is this the final installment in the firming up of rules” concludes Michael Chai.
The New Zealand FSP has implemented an inspection procedure whereby they will conduct regular inspections to ensure that a physical office is maintained in the region and that the compliance procedures and rules for keeping client records are being adhered to.