New Zealand has one of the most thriving Forex markets in the world. Throughout the years, they have solidified themselves as one of the leading Forex countries, and have served as an example of what each and every country should aspire to. It also happens to be one of the countries that have shown the biggest amount of growth. The thing is, New Zealand definitely wasn’t as good as it is now, in terms of its Forex market. For many years. it has had some serious problems like lack of proper regulation, lack of viable broker options, etc.
However, through making some steady progress, it has now become one of the strongest markets, and New Zealand citizens have some of the best trading options in the world. It is exactly because of this reason that Forex has become so popular in New Zealand within the last years, and so many people are trying their luck with trading. If you are one of those new people interested in Forex trading in New Zealand but are not sure where to start, this guide is for you! Here, we’ll be discussing how Forex trading in New Zealand works, what has changed in the last few years, and who are the legal entities looking out for your safety now. By the end of reading this, you will have a solid understanding of what to expect, and where to start.
Our list of top New Zealand based Forex brokers
Before you go ahead and learn the most important details about trading safely, securely, and profitably in New Zealand, make sure to check out our list of selected brokers in New Zealand. This list was selected based exactly on what our audience believes to be the most important requirements, such as safety, security, accessibility, availability of a lot of options, etc. If you are looking for the best all-around broker that will satisfy most of these criteria and will give you the best tools and opportunities to start off your Forex journey on the right foot, then we hope that you will enjoy our list of selected brokers form New Zealand!
FCA, CySEC, IFSC, ASIC, DFSA
MT4, MT5, WebTrader
Desktop, WebTrader, Mobile
FCA, ASIC, CySEC, FSCA, FMA, MAS
WebTrader, Windows 10 Trader
Forex Regulation in New Zealand
New Zealand has a very interesting story when it comes to its Forex regulation. You see, it wasn’t always an exemplary Forex country that all countries are aspiring to. In the past, New Zealand has had some really serious issues, mainly the issues of security and safety. The reason is that it lacked a proper, effective regulatory environment that would ensure the safety and security of the traders. Due to this, the market was overloaded with scams and frauds. A lot of people were losing a lot of money, and it got really bad.
The thing is, New Zealand did already have a regulatory body that was responsible for these matters. It was the Securities Commission, but it simply wasn’t effective and wasn’t taking any substantial action towards these issues. This was all magnified by the impact of the 2008 financial crisis, making the situation far worse for the reputation of the market, and most importantly, the financial well-being of the traders and the victims of these scams.
Over time, as more and more brokers started joining the New Zealand financial market, the need for proper regulation simply couldn’t be postponed anymore, as these scams were really damaging the reputation of the country’s financial market, so the government needed to start taking action.
Financial Markets Authority
The first step that New Zealand took was to dismantle the Securities Commission and introduce a new, better, and effective regulatory body called the Financial Markets Authority (FMA). This was to be one of the main actions that contributed to the betterment of the market. FMA has done an absolutely amazing job at introducing crucially necessary changes and imposing some really effective new regulations which were the main contributor in turning the New Zealand Forex market into what it is today. Since then, New Zealand has made a total 180-degree turn and is on a much higher level.
After it was installed, FMA supervised, controlled, and ruled the local Forex market with an “iron hand”. What we mean is that it started taking a very strict and uncompromising approach towards the brokers’ compliance with rules and regulations. Failure to follow their rules and regulations would result in brokers being fined significantly, with many of them losing their license and permission to operate in the country. For many brokers, this was a cause of a lot of frustration and problems. The issue was that the transition from Securities Commission’s framework to FMA’s new and radically different requirements was a bit too rough for many brokers, many of whom were genuinely decent brokers with no bad motives.
However, this kind of strict approach was exactly what the market needed, and it is what it got. The number of scams decreased significantly, and the traders got an opportunity to enjoy the market without the constant fear of getting scammed. To this day, FMA has one of the strictest approaches to regulating ht market, and it’s working wonderfully for rebuilding the trust between the traders and brokers.
What exactly changed, and what are the FMA’s demands for New Zealand regulated Forex brokers?
FMA’s effectiveness is based on a combination of many new changes that it introduced. Taken together, these new laws and requirements have all allowed the market to become what it is today. First and foremost was the introduction of the license. To obtain this license, a broker is required to satisfy a certain standard of service and conduct. This by itself already raised the bar and allowed only the better brokers to filter through. As mentioned, the provision of the license depends on the broker satisfying some strict requirements, all of which are geared towards making everything better for the traders.
One such requirement that the FMA has introduced for all brokers is the requirement for very detailed reports. The reports would contain all sorts of information, such as the financial activities of the broker, the statistics on the performance, compliance with the relevant laws, and more. These audits would allow the FMA to keep a close track on the activities of the brokers, and ensure that everything is in accordance with the best interests of the traders. Additionally, this would help them identify any brokers that would be conducting their business in an unethical or fraudulent way. This would also allow them to keep a track of any and all changes that these brokers would be introducing in their terms of service that may possibly affect the traders.
One other very effective method that FMA uses in identifying potentially unethical brokers is by encouraging reports from the employees. If an employee of the broker believes that there is anything unethical about how the broker runs, they can make an anonymous tipoff that can help in bringing justice to the broker. Using the help of whistleblowers like this has proven to be very effective in combating the possible wrongdoing of brokers.
With its very effective methods of keeping the market and the brokers in check, FMA has managed to completely change the New Zealand Forex market, turning it from one of the riskiest and dangerous markets for traders, into one of the safest, and one where brokers unanimously follow the local laws and regulations. The punishment for not doing so is simply too strict, so the brokers would rather follow these “draconian” regulations rather than risk the possibility of a large fine, or worse, closing down.
What options do the New Zealand Forex brokers offer?
Its safety aside, New Zealand is known to be one of the biggest financial hubs for trading in the world. People from all walks of life trade there. It is really one of those countries where a regular everyday person like us can be trading without you even knowing about it. As such, the options for trading are endless there. In general, you can be sure that New Zealand brokers can offer you pretty much anything else that any other Forex market can offer you.
As an example, as a New Zealand native, would you prefer to trade on something familiar, like the NZD, which is something that you have a vested interest in performing well? Well, you can join the army of traders in New Zealand who are trading on the NZD in huge amounts every single day. To give you an idea, NZD has been the 10th most traded currency in the world for many years now.
The reason for this is that New Zealand has always had a high foreign exchange to GDP ratio. The Forex market of New Zealand, on average, has handled USD$9.5 bln per day in the month of April back in 2019, which is definitely impressive.
Aside from that, New Zealand offers a huge selection of commodities that you can trade on. Whether it is oil that you’re interested in or something different like gold or other precious metals, the options are limitless. If you check out any of the brokers from our shortlist, you will instantly find the abundance of their options, in terms of the commodities that they allow to trade on. All in all, variety is the name of the game in Forex, and New Zealand brokers know this very well, so you will have tons of options to build your big and successful portfolio on!
Advantages of Forex trading in New Zealand
As a quick summary, here’s what you get for choosing New Zealand as your destination for Forex trading:
- Thanks to FMA’s strict approach, safety is taken to the highest level
- A large community of traders
- The national currency is relatively strong
- Due to vert strict and high standards, the quality of brokers is higher
Closing thoughts on Forex trading brokers New Zealand
As we have learned, in the past, luck hadn’t been on New Zealand’s side when it came to Forex trading. The market was plagued by fraudsters and scammers, who all were a big hindrance to the progress of the market not only because they damaged the traders financially, but they were really negatively affecting the reputation of New Zealand’s financial market. Thanks to some very innovative and actionable implementations made by FMA and the New Zealand government, the situation is radically different today, and the market has changed for much better.
Now, every New Zealand native, or anybody else looking into the possibility of trading in New Zealand, is given a much better environment to trade safely, and shoot for success straight away. If you’ve been considering getting into Forex in New Zealand but were hesitant due to the horror stories you’ve heard, rest assured that since then, the situation has changed radically, and only for the better!