The High Court in Auckland has upheld the deregistration of Pakistani-owned foreign exchange firm Excelsior Markets, agreeing that the company didn't operate in New Zealand, and if it kept its registration, that could mislead people into thinking it was regulated by local law.

Justice Gerald Nation dismissed Excelsior's appeal to overturn its removal from the Financial Services Provider Register.

The judge accepted the Financial Markets Authority's decision to remove Excelsior was justified because "most, if not all" of its financial services were provided outside New Zealand.

"Because of this, its financial services activity was not subject to the regulation and laws of New Zealand," the judgment said. "That made it undesirable for Excelsior to remain registered in New Zealand as a financial services provider."

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The FMA has powers to direct the registrar to remove companies where it is likely they are giving a false or misleading impression about the extent to which they are regulated in New Zealand. It's concerned some offshore companies may be trying to take advantage of New Zealand's reputation as a well-regulated jurisdiction.

Excelsior is owned by United Arab Emirates-based Excelsior International, whose sole shareholder is Pakistani national Hussain Gulraze Mir. The company provides foreign exchange margin trading through a UK-based platform, though most of its business is in Sri Lanka.

The judge rejected the firm's argument that its registration wasn't misleading because it was based in New Zealand, and it had to be a party to a dispute resolution scheme.

"It would appear that Excelsior was a party to arrangements that would enable people overseas using bank accounts so that the source of the funds being invested was not known to those dealing with the investments," the judge said.

"If this was being done in part through the auspices of an organisation which had the respectability and sanction that others would see as being implicit in it being registered in New Zealand as an FSP, I would accept and do accept without further evidence that it is likely there would inherently be damage to the integrity or reputation of New Zealand financial markets."

Justice Nation turned down other applications that the FMA was unreasonable in its decision, saying he didn't accept it was mistaken in characterising the way the firm ran its business, nor did the regulator misinterpret the act as being inapplicable to firms providing financial services to foreign clients.

Excelsior was one of 23 firms removed from the register by the FMA and lodged its appeal the day after a successful bid to overturn a decision against Vivier & Co. That firm argued its rights to natural justice had been breached when the regulator failed to supply the financial services firm with detailed evidence regarding the decision to strip it of its registration.

Justice Nation said he differed from Justice Timothy Brewer in the Vivier decision over the FMA's need to have enough evidence demonstrating that a firm's registration creates or causes a misleading appearance about the extent to which it provides local financial services.

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"In my view, if the FMA concluded Excelsior's financial services were being provided almost wholly outside New Zealand, that could provide a sufficient basis for the FMA to conclude that there could be a misrepresentation as to the extent to which those services were regulated in New Zealand," the judge said.

Justice Nation also differed in that he didn't think the FMA needed evidence to show the way in which a firm's business would damage New Zealand's reputation.