New Zealand Financial Markets Authority Censures CFD Service Provider CTRL's Breaches

On July 19, New Zealand's Financial Markets Authority (FMA) announced to censure New Zealand-based CFD trading services firm CTRL Investments Limited (CTRL) for breaching its Derivatives Issuer license obligations.

Last year, the collapse of an overseas e-money institution that held a significant amount of CTRL's assets left the company failed to meet the required minimum Net Tangible Asset (NTA). In October 2023, CTRL reported the situation along with the reasons for the delay in submitting its annual financial statements to the regulator.

As an FMA financial services licensee, CTRL was supposed to submit a plan of replenishing its net tangible assets within 10 business days of the breach and report its NTA level daily until the assets were restored. However, CTRL failed to complete these requirements within the required timeframe.

Peter Taylor, Director of Response and Specialist Supervision at the FMA, says: "The FMA expects licensed market service providers to understand and comply with their legal obligations. Derivatives are inherently risky, and it is important that the FMA has confidence in derivative issuers and their level of regulatory compliance. In situations where issuers hold the majority or all their assets in one entity, we expect the issuer to manage the risk appropriately. Although CTRL had no open positions or retail clients at the time of the breaches, its approach to the various contraventions and the materiality of those conventions warrants a censure."

CTRL has now restored its net tangible assets to the required level.