Is Binary Options Trading Legal in New Zealand? (FMA Status)

The FMA pages cited here describe licensing requirements and risk warnings; they do not say that binary options are banned. From December 2017, any company making regulated offers of short-duration derivative products to New Zealanders that settle within 3 days, whether they are based here or abroad will require a licence. The FMA warns that binary options are very high risk.

What the Rules Say

The FMA pages cited here describe licensing requirements and risk warnings; they do not say that binary options are banned.

In a media release dated 3 April 2017, the FMA stated: "The Financial Markets Conduct Act introduced licensing for derivatives issuers in December 2014."

The FMA confirmed: "From December 2017, any company making regulated offers of short-duration derivative products to New Zealanders that settle within 3 days, whether they are based here or abroad will require a licence."

The FMA explained: "The FMA has been reviewing how it regulates short-duration derivative products such as binary options and contracts-for-difference (CFD), due to concerns about the harm these products pose for investors." The release does not state that binary options are banned.

These FMA materials are dated 2017 and 2018; check the FMA website for current guidance.

On its consumer guidance page, last updated 28 September 2018, the FMA stated: "Binary options are very high risk, even for experienced investors."

The FMA noted: "Also called 'all-or-nothing', 'fixed return options' or 'digital options', binary options enable you to make (or lose) money by predicting the short term movements in the price of a share, commodity, currency or index."

The FMA stated: "Most foreign traders are unregulated. This means there's little oversight and there's a higher risk the provider may default on its payments or the investment could be a scam."

The FMA instructed investors: "Make sure your provider is licensed by us. A licensed provider must meet the minimum standards required by law, and we monitor them."

The FMA warned: "If they don't have a licence, don't deal with them."

How to Check a Firm

The FMA's 'Licensed & reporting entities' page lists businesses that have been granted a licence or authorised by the FMA (FMA).

If a firm does not appear on the relevant register, treat that as a reason to stop and check further before sending money.

Frequently Asked Questions

Does New Zealand impose a ban on binary options?

The FMA pages cited here describe licensing requirements and risk warnings; they do not say that binary options are banned. The media release of 3 April 2017 does not itself state that binary options are banned.

What licensing requirement applies to short-duration derivatives in New Zealand?

The FMA stated: "From December 2017, any company making regulated offers of short-duration derivative products to New Zealanders that settle within 3 days, whether they are based here or abroad will require a licence."

What warnings does the FMA publish regarding binary options providers?

On its page last updated 28 September 2018, the FMA stated: "Binary options are very high risk, even for experienced investors." The FMA stated: "If they don't have a licence, don't deal with them."

Does this page address individual liability?

This page summarises what the regulators' published rules say. It does not address whether an individual could face liability. Seek independent legal advice.

Sources and Official References

• FMA Media Release (3 Apr 2017): https://www.fma.govt.nz/news/all-releases/media-releases/fma-confirms-short-term-derivatives-to-be-licensed/
• FMA Binary Options Guide (last updated 28 Sep 2018): https://fma.govt.nz/consumers/ways-to-invest/binary-options/
• FMA Licensed & Reporting Entities: https://www.fma.govt.nz/business/licensed-providers/

This page summarises what the regulators' published rules say. It does not address whether an individual could face liability. Seek independent legal advice.