FMA prevents CLSA Premium NZ from offering derivatives to retail investors

Chris Hamblin

28 September 2020

The FMA says that CLSAP NZ failed to meet some of its "audit and assurance obligations" for 2019 and it is not confident the firm will be able to meet those obligations in the near future. These obligations include:

section 461D Financial Markets Conduct Act 2013, which states that financial statements must be audited;
section 461H, on the lodgement of financial statements;
Regulation 248 of the FMC Regulations, on "assurance engagement"; and
Condition 11 of the Standard Conditions for Licenced Derivatives Issuers.

The conditions that the FMA has imposed allow CLSAP 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 those investors might have towards it.

Nobody knows how long the conditions will remain in place.

CLSAP NZ, formerly KVB Kunlun New Zealand Limited, is the local subsidiary of a Hong Kong parent, CLSA Premium Ltd. In an unrelated matter, the regulator has taken civil action in the High Court against the same firm for alleged breaches of the Anti-Money-Laundering and Countering the Financing of Terrorism (AML/CFT) Act.