The Financial Markets Authority (FMA) of New Zealand announced this Monday that it has yet again managed to successfully defend a direction to de-register foreign exchange firm FXBTG Financial Limited, with the High Court ruling in the regulator’s favor.
Earlier this year in June, the New Zealand regulator directed the Companies Office, as the registrar of the Financial Service Providers Register (FSPR), to de-register FXBTG Financial Limited.
According to the statement provided by the watchdog, FXBTG was registered in New Zealand, but it wasn’t actually providing any financial services to New Zealand customers. Instead, the company was trying to leverage New Zealand’s reputation, the FMA said.
FXBTG had appealed the FMA’s direction. However, Justice Francis Cooke dismissed the appeal. In his judgment, Cooke said that sections of the Financial Service Providers Act had been 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.”
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In the judgment, Cooke noted that all of the forex firm’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.”
FXBTG is the fourth win for FMA
This is the fourth time the New Zealand regulator has successfully defended an appeal against a direction to de-register, according to Nick Kynoch, FMA General Counsel. The other cases include Excelsior Markets Limited, Innovative Securities Limited, and Vivier & Company Limited.
“This case demonstrates the lengths some firms are willing to go to stay registered on the FSPR and take advantage of New Zealand’s reputation,” added Kynoch. “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,” he continued.