New Zealand FSP  Advantages to be licensed in New Zealand  About TBA  TBA Partners

New Zealand has legislated for the fast and relatively uncomplicated creation of a corporation which can operate virtually in the same manner as a bank whilst avoiding the restrictive controls of banking legislation. Under the Financial Service Providers (Registration and Dissolution Act 2008 (‘the Act’), a New Zealand company can be registered as a financial services provider.

This means that the company is effectively registered by the Ministry of Economic Development to offer financial services or …

New Zealand is recognized as a premium jurisdiction for the following reasons:There is no minimum capital requirement.

It provides the all advantages of all traditional financial centres, and is recognized as a true onshore financial centre which is not blacklisted by any jurisdiction or authority in the world.

It is not perceived by O.E.C.D. as a harmful tax jurisdiction, and has no connotations as a tax haven.

TBA takes pride in our high standard of professionalism and we believe we operate at the highest level within the industry.

We are qualified and capable of delivering products and services to provide solutions to clients from around the world. If you choose to initiate a business relationship with TBA, you are gaining the benefit of our reputation and are indirectly associated with our reputable client base which we have developed since April 2009.

Our local partner and associate, ABC Accounting Services Limited, registered in 2007, provides a full range of accounting, business support, and consulting services to the SME market in New Zealand.

ABC is fully owned and managed by Alex Bob Cijffers, BCA a long term resident of Wellington and a graduate of Victoria University of Wellington, with a wide and comprehensive accounting experience in a variety of companies and industries over a period of 10 years.

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NZ Financial Services

Meaning of Financial Services Who Needs to be Registered Permitted Services License Requirements Professionals

Some examples of common financial services are below:

Providing financial advice
(including investment planning)
Mortgages, saving and cheque accounts, and loans
Consumer loans and credit – such as when you buy an item from a retailer on credit or you obtain a cash loan
Issuing and managing means of payment (for example, credit and debit cards, cheques, travellers’ cheques, money orders, bankers’ drafts, and electronic money)
Money transfers
Foreign currency exchanges – whether buying or selling
Money management and/or advice

Entities and individuals who:

– live or have a place of business in New Zealand; and
– are in the business of providing financial services (in New Zealand or overseas) must register to provide that particular financial service on the FSPR.

Those entities and individuals will have to register as a financial service provider (FSP).

This means that entities which provide financial services in the territory of New Zealand are required to become registered as an FSP.

However, if a New Zealand registered entity provides financial services internationally …

Once registered, the FSP can offer:

Financial adviser service
Broking service
Acting as a deposit taker as defined in the Reserve Bank of New Zealand Act 1989
Keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons
Providing credit under a credit contract
Operating a money or value transfer service
Issuing and managing means of payment (for example, credit and debit cards, cheques, travelers’ cheques, money orders, bankers’ drafts and electronic money)
Giving financial guarantees

Many financial market professionals require a license in order to do business. This page covers license details and obligations for all licensees.

Auditors
Authorised financial advisers
Brokers
Crowdfunding platforms
Derivatives issuers
Discretionary investment management services (DIMS)
Independent trustees
Managed investment scheme (MIS) managers
Market operators
Peer-to-peer lending providers
Qualifying financial entities (QFEs)
Registered financial advisers and entities
Supervisors

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FSP Registration
Recent Requirements

The requirements to obtain and maintain a New Zealand FSP have recently suffered substantial changes.

Concrete proof that the applicant:

-Has the necessary and required professional experience in the financial area, more specifically in the activity they will be applying for;
-Has the professional qualification in the financial area;
-Has set up an office with local qualified employee(s) or legal physical representative;
-Considers New Zealand based clients as the major target market to develop and carry out their financial activities;
-Has its website fully compliant with the financial activities it has been granted for;
-Has a trading platform set up, and marketing strategies are ready to go;
-Subject to getting FSP registration, is ready, willing and able to commence business from NZ without delay;

We have directly accompanied all such changes, staying on its top, to grant your FSP entity is properly setup from the very beginning.

Our New Zealand FSP services include full compliance with the rules of the Companies Office and FMA, and allows for a straightforward process in obtaining your New Zealand FSP Registration. We ensure successful registration and a continued compliance with all regulators on an ongoing basis.

New FMA Role

FMA is one of three main regulators working together to regulate economy and support a financially healthy New Zealand.

-The Reserve Bank of New Zealand – prudential regulation and supervision, in charge to implement monetary policy;
-Financial Markets Authority – Financial Conduct Regulator, in charge for licensing, compliance, supervision and systems oversight;
-Commerce Commission – In charge for Fair-trading, mergers and acquisitions, regulated industries

FMA has been shown they are not satisfied about the way the FSPs are conducting their business in NZ. In their view, just having an administrative office in NZ, it is not sufficient by a large measure.

An existing FSP or an application must show clearly how the FSP is conducting their business from NZ for both overseas and NZ based clients.

FMA expects that a current or prospective FSP must show clearly how they are conducting the business from NZ, in order to justify having a New Zealand FSP registration.

Offers under the FMC Act

Anyone offering financial products for issue or sale needs to comply with financial markets legislation. The Financial Markets Conduct Act 2013 (FMC Act) defines these people as issuers.

Anyone offering financial products for issue or sale needs to comply with financial markets legislation. The Financial Markets Conduct Act 2013 (FMC Act) defines these people as issuers.

Issuers – Issuers are people who are involved in first making a financial product available. See section 11 of the FMC Act. They include:

  • the person (other than the guarantor) liable to pay under a debt security
  • the company to which an equity security relates
  • the manager of a managed investment scheme
  • any party that has entered into derivatives.

Offerors – People who are the issuer for an offer of financial products for issue or in any other case the person who has the capacity, or agrees to, transfer the financial products. See section 6 of the FMC Act for more information.

The FMC Act defines 4 types of financial products

Debt security
A product where there is a right to be repaid money or paid interest on money.

Equity security
A share in a company, industrial and provident society or building society.

Managed investment product
An interest in a managed investment scheme that allows investors to participate in, or receive, financial benefits produced principally by the efforts of another person under the scheme.

There are two types of managed investment schemes:

(a) Managed Fund;
(b) Other managed investment schemes

Derivative
A product where an agreement is reached under which consideration may be required at a future time, and the value of the agreement or   consideration is linked to something else, for example an asset, a rate, an index or a commodity. This covers a wide range of products including:

 – futures  contracts  and  forwards options (except options to acquire an equity security,  a  debt  security,  or  a  managed  investment  product by way of issue)
– swaps
– contracts for difference, margin contracts and rolling spot contracts
– caps, collars, floors and spreads.

 

New Zealand
Foreign Exchange Trading – Forex

A regulated offer means an offer of financial products to one or more investors where at least one of those investors requires disclosure, usually a product disclosure statement.

Regulated offers
DIL – Derivatives Issuer Licence

Online foreign exchange trading is used by some people to try to make a quick profit by betting on the changing value of foreign currencies. But they are just as likely to lose money as make it.

The risk is even higher if one trades with borrowed money, as this increases any gains or losses you make.

The value of currencies changes constantly. Forex trading is the buying and selling of foreign currencies.

Forex trading – You can trade in Forex by:

  • Purchasing foreign money (that will need to be held in a foreign currency bank account) with the hope that the currency will increase in value against the NZ dollar, or

Buying and selling contracts linked to the exchange rates between two currencies from a licensed derivatives issuer. These contracts could be called things like forwards, swaps, options, contracts for difference (CFDs), and margin FX contracts.

DIL – Derivatives Issuer Licence

The only FSP registration that requires a DIL is for this category: “Trading financial products or foreign exchange on behalf of other persons”

Forex trading using contracts linked to the exchange rate between two currencies is classed as trading a ‘derivative’ financial product. A derivative product involves trading in the changing value of an underlying asset such as currencies, shares, bonds, commodities or interest rates. In New Zealand, individuals or businesses offering these contracts must hold a ‘derivatives issuer licence’ from FMA.

  1. A DIL licence application is distinctly different from applying for FSP Registration for the “Trading financial products or foreign exchange on behalf of other persons” category
  1. Due to the nature of CFD products, FMA may consider it unusual that a company would trade these products without issuing them.  Under FMC Act a derivatives issuer must be licensed to make a regulated offer of derivatives.  A ‘regulated offer’ is an offer where disclosure must be made to at least one investor, for example, because an investor is a retail investor in New Zealand.  Schedule 1 of the FMC Act sets out the exclusions to the disclosure requirements.  ‘Derivative’ is broadly defined and includes margin contracts.
  1. If an applicant elects not to offer CFDs, a Derivative Issuer License may still be required, as clients will be trading on margin (i.e. entering margin contracts).  And based in our experience, FMA will still seek confirmation of whether the company intends to offer CFDs and, if so, the details of how these products will be provided.

Your FSP application and FMA

The requirements to obtain and maintain a New Zealand FSP have recently suffered substantial changes.

The Registrar of Companies (Companies Office) has issued strict requirements on who can register as an FSP, inclusive required local presence in New Zealand and NZ as a targeted market.

FMA has been shown they are not satisfied about the way the FSPs are conducting their business in NZ. In their view, just having an administrative office in NZ, it is not sufficient by a large measure. An existing FSP or an application for one must show clearly how the FSP is conducting their business from NZ for both overseas and NZ based clients.

FMA expects that a current or prospective FSP must show clearly how they are conducting the business from NZ, in order to justify having a New Zealand FSP registration. The Registrar and/or the FMA need to be able to visit the business address and make enquiries of management of the company or its employees in the event that a complaint is received.

Concrete proof that the applicant has set up an office with local employee(s), has the necessary and required professional experience in the financial area, more specifically in the activity they will be applying for; has the professional qualification in the financial area; has set up an office with local qualified employee(s) or legal physical representative; considers New Zealand based clients as the major target market to develop and carry out their financial activities; has its website fully compliant with the financial activities it has been granted for; has a trading platform set up, and marketing strategies are ready to go; subject to getting FSP registration, is ready, willing and able to commence business from NZ.

What you need to know

In order to obtain a FSP registration and offer financial services in New Zealand and internationally, you will need:

To register a New Zealand legal entity;
To have its own place of business and management in New Zealand, where the company will be offering its financial services from;
To apply for membership with a government approved Dispute Resolution Scheme (in case of services provided to retail clients);
To register with FSPR for those financial activities/ services to be carried out;
To open and maintain a local business bank account;
To maintain appropriate financial and corporate records in New Zealand;
To comply with bookkeeping, accounting, pay-rolls, audit and any other legal local requirements;
To have a local resident Company’s Office Manager physically available for any Regulator’s inspection at the Company’s local premises;
To file an annual Anti-Money Laundering and Countering Financing of Terrorism Act 2009 Report (AML/CFT);
To have a risk assessment and AML program in place, from the date of registration on the FSPR; and, as per newer legislation;
To have at least a local resident New Zealand Company Director; and

Information we need from you

For further compliance, we need you to provide us:

Company Application Form to be filled and signed;
Organizational/structure chart showing board of directors, shareholders, list of senior persons (compliance officer, Money Laundering Reporting Officer and deputy) and other officers who will would be responsible for the day to day operations;
Business plan with 3 year projections giving details of proposed activities, types of customers, products and services to be offered (brokerage, CIS securities, underwriting, etc.);
An Internal Procedures Manual;
An Anti-Money Laundering & Compliance Procedures Manual;
Details of proposed membership with an Exchange, clearing and settlement facility, etc;
Details of procedures and systems to prevent conflicts of interest, terrorism and money laundering;
An indication as from where the company intends to operate;
Indication of the profile and location of the target clients of the company;
Details of the modus operandi of the company (mode of operation);

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Expected Time to Complete
Your FSP Application

Step 1
The current process appears to take about I ½ to 2 weeks to incorporate a company, obtain a NZ Bank account and necessary/eventual changes on the shareholder and directorship structure.

Step 2
A Business Plan (in case Client has contracted this service from TBA) has to be written and edited, CVs to be vetted, a NZ office and a part time manager appointed before formally applying online with FSPR. Dependent upon TBA’s input, it can take another 4 to 6 weeks for this process to be completed.

Step 3
FSPR tends to take another 4 to 5 weeks, considering all questions they may and usually place before handing over the application to FMA.

Step 4
FMA’s official position is that their enquiries will take up to 60 working days (i.e., 12 weeks) before we get a definite answer.

Total Expected Timing to get this whole process completed – 25 weeks.
Therefore 5 to 6 months for you to consider getting your own project licensed, that will be a reasonable timing.