Firma Foreign Exchange Corporation (NZ) Limited

Firma Foreign Exchange Corporation (NZ) Limited has censured Firma Foreign Exchange Corporation (NZ) Limited after finding it had materially contravened a number of its obligations as a licensed derivatives issuer (DI).

Through its ongoing monitoring of the DI sector, the FMA was satisfied that Firma NZ materially contravened its licence obligations because it:

• Failed to conduct product suitability tests for clients
• Repeatedly failed to meet net tangible asset requirements (DI’s must have net tangible assets of at least $1 million)
• Did not regularly provide statements to derivative investors regarding their investments (i.e. a list of a customer’s derivatives, their value, the amount of investor money held, and any amount allocated to margins)
• Failed to have adequate and effective systems, policies, procedures and controls

Licensed derivatives issuers must ask retail investors to provide information about their knowledge, experience and level of understanding of the relevant type of derivative to enable the DI to assess whether the derivative is suitable for the individual.

Auckland-based Firma NZ provides foreign currency exchange forward contracts to retail clients in New Zealand. It has been licensed as a DI since 2015 and is a fully owned subsidiary of Firma Foreign Exchange Corporation, based in Canada.

The censure was issued under section 414(2) of the Financial Markets Conduct Act, which allows the FMA to censure a licensed firm and require an action plan if the FMA is satisfied a business has materially contravened its obligations.