FSPR Forex Regulation Explained

If you’re looking for the very best FSPR regulated brokers, you’ve come to the right place. Our free, expert guide will explain how the FSPR operates, what they do, and how you can go about finding the best brokers regulated by the FSPR.

New Zealand has become a very popular destination for brokers wishing to set up business. This is partially due to the relatively small entry barriers, but also its proximity and access to the Asia-Pacific area.

In New Zealand, the primary regulator of all financial companies – including brokers – is the FMA, or Financial Markets Authority. Brokers must also register their business with the FSPR (Financial Service Providers Register), and the FSCL (Financial Services Complaints Agency). All of these bodies allow investors to search their databases to determine whether a company is a regulated broker.

Read on to find out all you need to know about the best FSPR regulated brokers around.

Best and most trusted forex brokers in April 2024

Can an FSPR regulated broker offer sufficient protection for traders?

There is no denying a company with FSPR status is subject to far less scrutiny from the regulator than those licensed and regulated by a more reputable agency, like Germany’s BaFin. However, the new rules do state an FSPR company will have to be inspected and audited.

In addition to this, a number of FSPR providers must also be a member of a dispute resolution service. The service doesn’t have to be linked to the government, but it does have to be approved by the Department of Consumer Affairs.

If you are considering an FSPR regulated broker you should bear in mind you will be dealing with a firm that offers less protection than you would get with a firm regulated by a stricter regulatory jurisdiction. You should seriously consider choosing a broker which has been licensed by the FMA (Financial Markets Authority).

What is the FSPR?

Financial Service Providers Register logoThe FSPR was introduced in 2010. It allows unregulated, over-the-counter brokerage firms and new start-ups the opportunity to gain customer confidence and credibility, without having to go through the regulatory barriers which other countries have in place.

These developments came about following the repeal of its 1995 Banking Act. The repeal gave overseas firms the opportunity to join the best FSPR regulated brokers with very few of the requirements imposed by other better known regulatory bodies. These included:

  • Minimum capital requirements
  • Supervision
  • Qualification requirements

What are FSPR regulated brokers required to do?

Forex brokers in New Zealand may have had things a little easier than brokers in other countries, but the recent tightening of the requirements are making it more of a level playing field.

Since 2013, FSPR listed brokers have had to comply with the following rules:

  • Have a physical presence within New Zealand
  • The office must have a compliance officer
  • The office has to keep client records and handle issues relating to the prevention of money laundering
  • The FSPR listed company must be a registered corporation and be in compliance with New Zealand business laws

Following the change in requirements, a number of firms lost their registered status. Some believe this has made it very difficult for firms to stay on the register, with related costs making it a struggle financially.

What does the FMA do?

The FMA is New Zealand’s government agency. It is responsible for enforcing the law in relation to securities, financial reporting, and companies with relation to financial services and securities markets. Additionally, it regulates financial advisers and brokers, securities exchanges, issuers and trustees.

Further adding to its credibility, the FMA is a member of IOSCO (International Organisation of Securities Commissions). And it’s a member of New Zealand’s Council of Financial Regulators, along with the Reserve Bank of New Zealand, New Zealand Treasury and the Ministry of Business, Innovation and Employment.

The changing goals of the FMA

When it was established in 2011, the aim of the FMA was to restore investor confidence following the global financial crisis and the large scale failure of a number of New Zealand companies. Today, it looks to promote and provide for the development of efficient, transparent and fair financial markets.

The FMA is committed to taking strong action against any firms breaking the law and failing to meet expected standards. The FMA has published a document which lists the following priorities:
Governance and culture – the organization’s strategy, culture and values should be led by the board and directors
Conflicted conduct – participants in the market must effectively manage conflicts of interest
Capital market growth and integrity – activities of the regulatory should facilitate growth and support market integrity
Sales and advice – these should be in the best interests of investors and consumers
Investor decision making – investors should be able to access all the necessary resources to help them make more informed financial decisions
Effective frontline regulators – all frontline regulators should be effective at what they do
FMA efficiency and effectiveness – the Authority aims to be effective and an efficient regulator
The FMA has shown it is more than capable of living up to its word, as it has been involved in regulatory action against a number of well-known companies.

Where to find the best FSPR regulated brokers

As you can see, trading in New Zealand is not quite as straightforward as it is in many other countries. There are three organizations to consider: the FMA, the FSPR, and the FSCL.

Ideally, you want to find a broker which is regulated by and registered with all three outlets. This will give you the maximum protection in the event of fraud or any other undesirable outcome. So, if you want to find the best FSPR regulated brokers, make sure their certification is all up to scratch.

Filing a complaint in New Zealand

We mentioned previously that brokers in New Zealand are obliged to register with the FSCL. This is where traders and brokers are able to fill in documents if they want to make a claim, complaint, or maybe a suggestion.

There are several measures in place which brokers are required to follow. Should an FSPR registered broker be found to be committing fraud, or if there is a problem with a trader’s activity, the FSCL will take responsibility and investigate the case. If a party is found to be guilty, they’ll hand out a suitable punishment.

if you want to participate in forex trading in New Zealand, your best course of action is to choose a broker which is FMA regulated, as well as being both FSPR and FSCL registered.

How to find out if a broker is FSPR regulated

There’s no big secret to discovering which brokers are regulated by the FSPR – if they are, they’ll tell you! In most cases, you can simply look at the broker’s website and try to find a license number and regulation details. The footer of the page is the most common place for it, but it could also be on an ‘About’ page or possibly in a section dedicated to regulation.

As there have been cases of brokers exaggerating or outright lying about their accreditation, it’s best practice to cross check any information you find on the broker’s site against that on the official FSPR website.

Was the information useful?