The Financial Markets Authority (FMA) has canceled Rockfort Markets Limited’s Derivative Issuer (DI) license over several material breaches of its regulatory requirements as a licensee.
Rockfort, which has operated in New Zealand under the trading name “RockGlobal” since 15 May 2023, was issued a DI license by the FMA in 2018.
“Rockfort (RockGlobal) is not fit to hold a license”
Issues with the broker started in 2019 and 2020, when the regulator engaged with RockGlobal in relation to potentially false or misleading advertising. According to the FMA, Rockfort did not fully comply with the requests to remove the advertising.
In March 2021, the FMA ordered RockGlobal to remove what it considered to be false or misleading advertising on its website. The advertising in question suggested RockGlobal was licensed to provide forex and share broking activities when those were not covered by its license. The FMA subsequently found the advertising remained on Rockfort’s website in August 2022.
The FMA cancelled RockGlobal’s licence under section 414(3) of the Financial Markets Conduct Act 2013. The cancellation took place on 19 July 2024 and the regulator imposed additional specific conditions and requested RockGlobal close out the few remaining open derivatives contracts it had with customers ahead of the license cancellation.
The regulator stated that RockGlobal was no longer capable of effectively performing the role of a DI and the FMA had reason to believe that the broker would be likely to contravene its market service obligations in the future.
FMA General Counsel, Liam Mason, said: “Removing a market license is one of our most significant interventions. In this instance, due to the serious and widespread nature of the contraventions, Rockfort’s compliance history, and the fact the FMA failed to see any improvement following our earlier actions, the FMA believes that Rockfort is not fit to hold a license. Cancelling Rockfort’s license is an appropriate and proportionate response to the multiple, material contraventions of its license obligations.”
The FMA initially decided to cancel RockGlobal’s license in March 2023, but the brokerage firm appealed the FMA’s decision to the High Court and obtained orders preventing the publication of any information relating to the case.
RockGlobal argued it only breached four of its license obligations, that the breaches were not material, that the FMA was wrong to find it no longer met the requirements for a license, and that a more lenient regulatory response would have been sufficient to deal with its non-compliance.
New Zealand High Court Justice Edwards dismissed Rockfort’s appeal on the above points in November 2023. Rockfort appealed the High Court judgment to the Court of Appeal and the non-publication order remained in place; however, it has now discontinued its appeal and the FMA can publish the case.
The FMA claims RockGlobal materially contravened eight of its license obligations, including:
- Failure to comply with a Direction Order issued to Rockfort on 3 March 2021.
- Failure to maintain adequate and effective systems, policies, processes, and controls to ensure compliance with its obligations under the standard conditions of its license (including in relation to its advertising) in an effective manner.
- Failure to maintain the same or better standard of capability, governance, and compliance as was the case when the FMA assessed Rockfort’s initial licensee application.
- Rockfort’s product disclosure statement did not contain mandatory information relating to hedging counterparties.
