Consultation paper: Standard conditions for derivatives issuer licences

Leverage: FMA-licensed DIs are currently not subject to leverage conditions. Some offer leverage up to 500:1. This level of leverage exposes investors to the risk of significant loss. The proposed new standard condition 14 will align DIs with leverage limits in other jurisdictions. 

Suitability: Standard condition 12 requires licensed DIs to assess the suitability of a derivative for a retail investor before the investor enters into the derivative. The requirements are not complex, but our monitoring has identified instances of non-compliance and ineffective procedures since the condition was introduced in 2015. The revised condition is designed to help DIs consistently assess suitability.