Rockfort Markets Limited Loses License After 5-Year Battle in New Zealand

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Rockfort Markets Limited’s right to issue derivatives has been canceled by New Zealand’s Financial Markets Authority (FMA) after its appeal was turned down by the High Court. The license is invalid beginning on July 19, 2024, after five years of regulatory checks and repeated failures to comply with the rules.

The High Court, led by Justice Edwards, agreed with the FMA’s decision from March 2023 to cancel Rockfort’s license. The court noted that Rockfort had committed significant violations of its license requirements.

Rockfort Had Breached An Initial Order From The Financial Markets Authority

Rockfort was found to have broken at least eight of the conditions, such as not adhering to a past FMA Direction Order and having weak systems for following advertising laws. Liam Mason, from the FMA General Counsel, stated that the removal of the market license is one of the counsel’s most significant interventions.

Rockfort’s problems started in 2019 when the FMA first flagged issues with possibly misleading advertising. Even though Rockfort had multiple discussions with the regulator, it did not completely resolve these concerns.

According to a recent report, Rockfort faced a serious problem with its product disclosure statement. The report said that Rockfort’s statement was missing important details about hedging counterparties, which investors needed to understand the risks of Rockfort’s products. This mistake was seen as a big issue for investors, making it hard for them to judge the risks involved.

New Zealand’s Court Accuses Rockfort Of Abandoning Its Initial High Standards

The New Zealand court discovered that Rockfort didn’t keep up the same high standards of skill, compliance, and governance that it had shown when first applying for its license. For seven months, the company had only one director instead of the three required, causing big problems in its management.

Rockfort had claimed that its mistakes weren’t significant and that a lighter regulatory action would have been fair. However, Justice Edwards rejected these claims. The judge noted Rockfort’s past issues with compliance and the increasing actions taken by the FMA.

The Financial Markets Authority has added new conditions for Rockfort and asked the company to close its remaining open derivatives contracts with customers before its license is canceled. This step is meant to protect investors and make sure Rockfort’s derivatives business ends in an orderly way.

New Zealand’s FMA is reported to be following Australia’s example. It is considering changes to make derivatives safer for consumers. In June, the FMA suggested a new rule that limits the maximum leverage on CFDs to 30:1, similar to regulations in Europe and other developed markets.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.