FMA Imposes Additional Conditions on CLSA Premium’s NZ Licence

CLSA Premium Limited, a foreign exchange (forex) broker, recently announced that the Financial Markets Authority (FMA) of New Zealand has imposed additional conditions on its derivatives issuer licence.

After the company’s auditor couldn’t complete the audit work for its subsidiary, CLSA Premium New Zealand Limited (CLSAP NZ), for the year ended on the 31st of December 2019, the FMA added specific conditions to prevent CLSAP NZ from making an offer to or receiving further funds from retail investors in relation to derivatives, except in limited circumstances.

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The New Zealand operations of CLSA Premium was formerly known as KVB Kunlun New Zealand Limited and is the country’s local subsidiary of the Hong Kong parent, CLSA Premium Limited. The company provides a range of financial services, such as brokering, derivatives and financial advice.

According to the announcement from CLSA Premium Limited’s Board of Directors on Monday, the auditor was denied access to the evidence relating to the Group’s Legacy Systems and data contained on the databases and servers maintained by Banclogix System Co., Limited. 

The conditions imposed on the company by the New Zealand regulator allow CLSAP NZ to close out open positions with retail investors. The company can receive funds from retail investors to meet obligations, such as margin or collateral requirements.

“The above conditions will take effect from 22 September 2020 and will remain until such time as the relevant compliant audit and assurance reports for 2019 are lodged, and the FMA is satisfied that the criteria for issuing a licence under the Act are met,” CLSA Premium said in its statement on Monday.

Issues in New Zealand for CLSA Premium continue

Following on from the additional licence conditions, CLSA Premium expects its operations in New Zealand to be temporarily affected, however, it will make the “best effort” to fulfill the audit assurance requirement and lift the conditions.

CLSA Premium has been having issues with its subsidiary in New Zealand for some time. As Finance Magnates reported, the FMA is suing CLSAP NZ for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.

For the three months before the date of its announcement on Monday, the New Zealand operations of the Group contributed approximately 24.8 per cent of its average turnover. Its Australian operations, however, made up 75.2 per cent of average turnover. 

In order to reduce the negative impact of its operations in New Zealand, the Group plans to continue the development of its business in Australia.

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