Auckland forex firm appeals FMA deregistration

Forex trading firm Excelsior Markets, whose parent company is based in the United Arab Emirates, says it has been wrongly deregistered by the Financial Markets Authority. Photo / Getty Images

An Auckland foreign-exchange trading firm owned by a Pakistani national is challenging being deregistered as a financial services provider.

The case comes hot on the heels of Vivier Markets successfully appealing its deregistration from the Financial Service Providers Register.

Auckland-based Excelsior Markets is one of a string of companies deregistered this year by the Financial Markets Authority.

The market watchdog at the time said it was concerned that some offshore companies were registered on the FSPR primarily to take advantage of the country's reputation as a well-regulated jurisdiction

This morning Excelsior, whose parent company is based in the United Arab Emirates and wholly-owned by a Pakistani national, appealed its deregistration in the High Court at Auckland.

The company's lawyer, Michael Locke, said the deregistration was wrong and that the FMA had made an error of law.

Locke referred to an FMA letter concerning the deregistration which claimed any financial services provided by Excelsior were done so from outside New Zealand.

The FMA, according to Locke, considered the registration of Excelsior on the FSPR was likely to create a false of misleading appearance that it provided financial services from New Zealand or that the provision of these services to clients are regulated by New Zealand law.

Locke said that while Excelsior currently had no New Zealand clients, it had been offering services to local customers.

All present clients were from South Asia, he said.

While Excelsior's "meta trader" software platform was based on overseas servers, the company's office was in New Zealand, orders from clients were taken here, the administrative work was done in this country and it had a local director, Locke said.

He said the FMA had "simply closed their mind" to the question of what Excelsior was doing for overseas clients.

The firm was regulated by the FMA to the extent that it could deregister them from the FSPR, Locke said.

"The FMA in short has the power to close down financial service providers," he said.

The hearing, before Justice Gerald Nation, continues.