11 June 2024

Consultation paper: Standard conditions for derivatives issuer licences

Final date for submission   5pm, Wednesday 7 August 2024   
Consultation document Consultation paper: Standard conditions for derivatives issuer licences 
Submission form Submission form: Standard conditions for derivatives issuer licences 
Email for submission   [email protected]

We are considering imposing a new standard condition and varying an existing standard condition for all derivatives issuer (DI) licences. All licensed DIs operating in New Zealand must comply with standard conditions the FMA imposes on their licences.  

Retail investors who trade derivative products are exposed to unique risks. The FMA’s view is that a new condition setting leverage limits and a revised suitability condition will help retail investors manage these risks. 

  • 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. 

We welcome your feedback on the proposed standard conditions. Please use the feedback form above. 

View the standard conditions for derivative issuer licences consultation paper

View the derivative issuer web page