New Zealand currently has a thriving and regulated foreign exchange trading industry, but the local foreign exchange market has been hit hard by the myriad financial frauds the country witnessed in the early 2000s.。

Moreover, the country's financial regulatory framework at the time was rather inadequate in dealing with financial fraud.。That all changed in May 2011 when the New Zealand government acted on its shortcomings by creating a brand new regulator that proved to be more effective in overseeing the local foreign exchange market。

New Zealand foreign exchange legislation

Forex trading is perfectly legal in New Zealand and brokerage firms are regulated by the local regulator, the Financial Markets Authority (FMA)。Brokers need to be authorized by the entity to begin providing legitimate services to traders from that jurisdiction。

FMA-registered brokerage firms are constantly scrutinised by regulators to ensure they conduct their business legally, transparently and responsibly.。Brokerage firms that fail to comply with the country's strict regulatory guidelines face a variety of penalties, including fines and license revocation.。Traders can check if a particular broker is authorized locally by looking at the official FMA registry。

Investors from New Zealand can legally trade a variety of financial instruments, including currency pairs, stocks, soft and hard commodities。Speculation on price movements through the purchase of contracts for difference (CFD) is also permitted under the law of this jurisdiction。CFDs that can legally purchase a variety of instruments, including forex, commodities, indices, or stocks。

No need to purchase underlying assets when trading CFD, brokerage firm clients are able to trade with more capital than they originally invested。Leverage can significantly increase their gains or losses, which makes CFD a highly volatile trading tool。

Unlike other countries such as Australia and the UK, New Zealand does not yet have specific limits on the maximum leverage that derivatives issuers can offer to local traders.。

Trading with binary options is also legal and regulated by the FMA。To obtain a license, binary options brokers must meet specific requirements。For example, they must have a physical office in the country and protect client funds by storing them in separate accounts.。Licensed brokers must conduct an internal assessment of their level of compliance and provide reports to regulators。

New Zealand Financial Regulator

New Zealand has a number of financial regulators, starting with the Financial Markets Authority (FMA), which oversees, licenses and punishes the foreign exchange brokerage firms that provide services to traders in the country.。

In May 2010, former Commerce Minister Simon Power set up the FMA after the public sharply criticised the failure and incompetence of the now defunct regulator, the Securities Commission of New Zealand, with one of its main objectives being to help develop transparent, safe and efficient financial markets.。

The agency ensures that all New Zealand Forex Brokers comply with its strict regulatory guidelines.。The FMA also acts as an intermediary in the event of disputes and conducts regular audits of locally regulated brokerage firms.。One of the disadvantages is the lack of an investment compensation scheme to protect New Zealand traders from the potential liquidation of brokerage firms.。

All financial service providers, including brokers and currency exchange dealers, should register with the Financial Service Providers Registry (FSPR)。Finally, there is the Financial Services Complaints Organization (FSCL), where brokers and local dealers can file complaints, claims and recommendations.。

It is an independent dispute resolution scheme which has been approved under the Financial Service Providers (Registration and Dispute Resolution) Act 2008.。FSCL handles various complaints related to financial services, including foreign exchange, card services, insurance and remittances。

New Zealand Foreign Exchange Payment Methods

Many brokers that accept New Zealand clients allow them to pay in the local currency NZD。As for the supported banking methods, traders in the country can often use Visa, Mastercard or Maestro to fund their live accounts.。

For New Zealanders who are reluctant to use the card for online transactions, there is also an alternative to international and domestic bank transfers, but bank transfers take several business days to complete。

All major New Zealand-friendly brokers support payments with digital wallets such as Skrill, PayPal and Neteller。Traders must transfer some money to their virtual wallet balance, usually from their bank account, credit or debit card。This allows them to make confidential and highly secure deposits directly through the digital wallet platform。

One method particularly popular with New Zealand traders is POLi, where New Zealanders are able to top up their trading balances directly through their bank's online banking platform.。

POLi acts only as an intermediary between the parties to the transaction。It facilitates fast and completely secure money transfers without the need for traders to go through the registration process.。Transactions are conducted in real time, which makes POLi a very time-saving deposit solution。

It is worth mentioning that New Zealanders wishing to use POLi must open an account with one of their affiliated banks in New Zealand, such as Kiwibank, TSB Bank, Westpac, Bank of New Zealand, ANZ Bank and ASB Bank.。

Before starting a deposit, New Zealand traders must check the minimum deposit requirements of the broker of their choice。Each broker has its own advice on the minimum capital required to start a trade。

Margin is another important thing to consider, the minimum amount you must have in a real account before opening a new position。The difference between the available balance of the account and the full value of the transaction is "borrowed" from the broker.。

Traders will receive a margin call if the account equity falls below the margin requirement set by the broker, in which case they must refill the balance with sufficient funds or liquidate open positions to restore the account equity to an acceptable level。

Hot trading software in New Zealand

New Zealand-friendly brokerage firms offer clients a mix of proprietary and third-party software。A good New Zealand brokerage firm gives local traders the option to test their platform in demo mode before they invest real money。

The platform should be intuitive enough and equipped with various additional features that traders can use for technical analysis and strategy testing, such as customizable charts with technical indicators, multiple time ranges, and graphic objects that can be applied on the chart。

Some proprietary platforms support copy trading, which enables clients to copy positions of selected skilled investors。The whole process is automated.。The software links part of the copied trader's funds to the account of the person they copied。

Therefore, the operations of the copy trader are performed in the copy trader's account, including opening / closing positions and setting stop / take profit orders。Traders who are copied usually make extra profits as more people follow and copy their trades。

The two most popular third-party platforms are developed by MetaQuotes and Spotware Systems。MetaQuotes is the developer of MetaTrader 4 (MT4), the world's most popular trading platform。

MT4 was launched in 2005 and quickly became the platform of choice for both beginners and experienced traders worldwide, thanks largely to its intuitive design.。The platform is designed for Forex trading。

Although the interface is slightly dated, many people still use it today。MetaTrader 4 also has various cool features that attract skilled traders, including 9 time frames, built-in email system, single-step strategy tester, hedging, 31 graphical objects and 30 technical indicators。The platform also supports hedging to better control risk。

New Zealand traders looking for more features and tools should sign up with brokers implementing the newer version of MetaQuotes software MetaTrader 5。It allows trading in foreign exchange, stocks, options, commodities, bonds and futures。There are unlimited symbols, multi-threaded strategy tester, 21 time ranges, 44 graphical objects, 38 technical indicators, email system with attachments and economic calendar.。

The Depth of Market tool shows the number of open buy and sell orders for a particular currency or security at different prices.。This tool actually measures the supply and demand of different securities and currencies。

Some ECN brokers serving the New Zealand market are more inclined to implement Spotware Systems' cTrader platform。This is a more modern platform with a compelling design, which is important considering that some traders spend hours staring at charts and analyzing market trends。The platform is equipped with various charting tools and supports copy trading。

Mobile transactions in New Zealand

Mobile trading requires a reliable and stable network connection, and most New Zealand forex broker apps are compatible with Android and iOS systems。

The app you choose should meet your personal preferences and goals as a trader。Experienced traders tend to prefer fast and reliable apps with advanced analytics and charting tools。Trading novices often tend to use apps that are accessible and easy to use, giving them tips on how to execute successful trades。

Essentially, these applications reflect the experience on the desktop。Traders can set up demo accounts where they can practice and improve their knowledge without any risk。Demo accounts are also suitable for mobile users who want to test new strategies on the fly.。

Other important features supported by most New Zealand-friendly brokers' apps include multiple chart types, customizable watchlists, plotting tools and many indicators for technical analysis。

FAQs

1.How to check if a broker is legitimate？

If you are not sure whether the broker you are interested in is legitimate, you can check its status on the website of the Financial Service Provider Registry (FSPR), where you can find detailed information about the services provided by registered brokers and their location。

2.What financial instruments can New Zealand customers trade？

New Zealanders have access to a variety of financial instruments, including currency pairs, commodities, CFDs, stocks and binary options。However, most beginner traders tend to choose spot forex due to its lower risk of financial loss。

3.What is the most popular currency pair in New Zealand?？

According to Chris Weston of IG Markets, a leading New Zealand brokerage, IG clients in the country are not as keen to trade in the local currency, the New Zealand dollar, against the dollar as one might expect.。Conversely, most New Zealand traders prefer major currency pairs such as EUR / USD, GBP / USD and AUD / USD。

4.Do brokers offering CFDs require a license？

Yes, under new rules set by the local regulator, the Financial Markets Authority (FMA), New Zealand brokers can offer leveraged derivatives, but only if they have an FMA licence。This applies regardless of whether the issuer is headquartered in New Zealand or other countries.。

5.Do New Zealand brokers charge transaction fees？

Many New Zealand brokers don't charge extra for forex trading, they profit from the built-in spread, which represents the difference between the bid and ask prices。Some brokers use fixed spreads, while others prefer floating spreads。Spreads usually vary depending on the trading instrument。