Compare FMA Regulated Brokers

Are you searching for an FMA regulated broker to trade with but unsure which one to choose? Don’t worry – we have done the hard work for you.

The FMA is NZ’s financial regulator and was established in 2011 to replace the Securities Commission. despite some earlier hiccups, the FMA has quickly become a well-respected financial regulator, with strict compliance and a no-nonsense approach.

However, comparing and choosing a New Zealand broker is not an easy task due to the large number of players now operating there. This is where we come in! In this guide, we will help you understand what an FMA-regulated broker does, the positives of trading with one, and we also list some of the best FMA brokers.

We hope this quick guide helps assist you in your search!

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What is the FMA and What Does it Do?

The Financial Markets Authority, or FMA, is the government agency responsible for monitoring the financial markets in New Zealand.

Established in 2011, the FMA was pierced together in the wake of its failed predecessor, the Securities Commission of NZ, to restore “the confidence of mum and dad investors in NZ’s financial markets“. Since then, the FMA has become one of the most respected financial regulators in the world; in the mold of Australia’s ASIC regime if you will.

In essence, the FMA is in place to facilitate fair, efficient, and transparent financial markets in NZ. Regarding online trading (CFDs), the FMA ensures that all FMA regulated brokers adhere to the strict polices and procedures they have clearly set out.

Choosing to trade with an FMA regulated broker has many benefits; some of these are listed below.

Should FMA Regulated Brokers Be Trusted?

We understand that New Zealand is hardly known as a financial hub and there may be some reluctance to trade with an FMA broker.

However, NZ is a first-world country with a strong and robust financial sector; and thus, it can hardly be considered a dodgy, offshore country to trade with.

Plus, after some broker scams and a couple of brokers going bankrupt pre-2011, the NZ Government were forced to seriously review their financial regulatory guidelines and make some big changes. So out went the previously outdated Securities Commission of New Zealand and in came the new and improved Financial Markets Authority.

The improvement was almost instant – protocols were reformed so much that even existing, legitimate financial businesses were halted from carrying out their core businesses, until a full industry review had taken place.

Since the changes made in 2011, the FMA has grown from strength to strength. Each and every broker is heavily scrutinized, both when applying for an FMA licence and also continually monitored if they are successful in their FMA application.

This means that all brokers regulated by the FMA should be safe, secure, and transparent in their offering and approach.

How Do Find The Best FMA Broker?

As explained above, the FMA is today considered a very reputable and respected regulator. Whilst there are always risks involved with online trading, including your broker going bust, all FMA brokers should be considered safe and secure.

  • Regulation

Always trade with a regulated broker and never trade with an unregulated broker. Simple as that.

FMA regulated forex and CFD brokers are considered very safe to trade with as the FMA has implemented such stringent standards to ensure that client safety is of the highest priority. To gain an FMA licence, a broker (and its Directors) needs to be able to demonstrate sound business practices and procedures, otherwise they are not granted an FMA licence.

  • Costs

Each FMA broker will charge you to trade on their platform, although each will have different pricing models. Some will offer spread-only, deals, while others will charge commission-only. Some may combine the two.

Always stay away from common marketing gimmicks like “trade from 0 spreads” and/or “trade commission-free”. It is likely you have a better chance of striking lotto than ever receiving a 0 pip spread, although not impossible we suppose!

Our guidance would be to find an FMA broker that offers tight spreads and low (or no) commission. Shop around ands compare a few!

  • Depositing & Withdrawing Money

If you are quite particular about how you need to fund the account, make sure your FMA broker offers that payment method. For instance, if you would like to deposit using Bitcoin, ask your broker if they offer that option before you sign up.

Most brokers will accept debit and credit cards, along with bank transfers, Skrill, Paypal, Neteller, UnionPay and even cryptocurrency.

  • Customer Support

You can tell a lot about the quality of broker by their customer support team. Some FMA brokers offer excellent customer support (BlackBull Markets for example) – friendly, smart, quick, human and helpful! Other brokers offer very poor support, and we feel that could be a poor sign of things to come.

We would recommend calling a few customer support teams and asking a few questions to ascertain how interested they are in your call and how informative they are.

  • Trading Platform

There are plenty of trading platforms to choose from, each with good and bad points. MT4 is a commonly-used platform that you will likely come across, as are MT5 and cTrader. Do you like any of these platforms? If not, do not use them and try find a broker that offers an in-house built, proprietary platform.

Again, test a few different platforms out and see what appeals to you.

The Role of the FMA in The Online Trading Industry

The financial products overseen by the FMA include derivatives, stock securities, debt securities and managed investments. All Forex brokers and CFD brokers fall within this scope of NZ’s legislation and are required to hold a valid FMA licence, allowing them to conduct regulated online broker activities.

As an FMA licensee, derivatives issuers are required to comply with:

  • Financial Reporting Obligations, including keeping thorough accounting records and lodging audited financial statements with the Companies Office;
  • Product Disclosure Statements (PDS) obligations;
  • Derivatives Investor Money requirements, which ensures that client money is segregated and held on trust, with thorough records maintained;
  • Supervision requirements, whereby licensed firms will be subject to the risk-based monitoring conducted by the Financial Markets Authority.

 

Other typical conditions for holding an FMA licence are:

  • Holding assets (NTA) of at least $1million or 10% of a brokerages average revenue, at any one time;
  • Illustrating a clearly robust management structure, with appropriate resources allocated for compliance and risk management;
  • Appropriate onboarding standards for new clients; and
  • Internal risk and client margin management.

How Do Check That a Broker Is FMA Regulated?

This is a critical last point before you go and open an account with any broker – check that they have the licenses they claim to hold.

This can be done by looking at the bottom (the footer) of a broker’s homepage online, where a broker will list which licenses they hold. Find this section and the relevant FMA license number, and then cross check this against the FMA’s official website, which will list all the best and worst FMA regulated brokers.