The Financial Markets Authority has temporarily banned the brokering and financial advice firm CLSA Premium NZ from offering derivatives to retail investors.
Photo: RNZ / Rebekah Parsons-King
The authority (FMA) said the firm had failed to meet some of its audit and assurance obligations for 2019, and was not confident it would be able to meet those obligations in the near-term.
"The FMA is concerned that CLSA Premium NZ does not currently meet all of the eligibility criteria for being issued with a derivatives issuer licence," the FMA said in a statement.
"The conditions that the FMA has imposed allow CLSA Premium NZ to close out open positions with retail investors, or receive funds from retail investors for the purposes of meeting obligations (e.g. margin or collateral requirements) that the investor might have with CLSA Premium NZ."
The firm would be prevented from offering derivatives to retail investors until it completed audit and assurance reports.
The announcement comes after the authority said back in July that it was starting to clamp down on firms offering derivatives after it found a number of weaknesses in the sector.
The derivatives sector - which includes futures contracts, swaps and options - is a niche and advanced investment option, with only 23,000 retail customer accounts.
The action taken by the FMA is unrelated to the anti-money laundering charges it filed against the firm back in June, which alleged the company failed to conduct proper due diligence and report suspicious transactions.
CLSA Premium New Zealand is owned by LXL Capital II, which is registered in the British Virgin Islands.
CLSA Premium New Zealand has been approached for comment.