The New Zealand Financial Markets Authority (FMA) announces today that it has suspended the derivatives issuer licence of EncoreFX (NZ) Limited.
29 April, 2020 | AtoZ Markets – EncoreFX provided forex, international payments and risk management services. The New Zealand FMA announced that it had suspended the derivatives issuer licence of EncoreFX (NZ) Limited after its parent company placed it under voluntary administration. Rees Logan, Stewart McCallum and Adam Nikitins of EY appointed as directors on March 30, 2020.
According to the FMA, EncoreFX’s client is mostly made up of wholesalers. EncoreFX still can close any open positions it holds with its existing retail customers. However, the administrators have provided the FMA with regular updates on administration.
According to its website, EncoreFX offers the most competitive exchange rates and effectively eliminates the guesswork in foreign exchange transactions by providing with a reliable process to strategically limit currency risk. “Our foundation built upon many years of foreign exchange market experience and professional knowledge”. The New Zealand regulatory authority issued a derivatives issuer licence of EncoreFX in August 2016, and the suspension took effect on April 24, 2020. However, the FMA said:
“To supply derivatives to retail investors, a business must have an FMA derivative issuer licence. Licence suspension may be lifted if directors find a new owner for EncoreFX. The owner has to demonstrate to the FMA that EncoreFX can meet the requirements of licenced derivative issuers”.
EncoreFX Reportedly Defaulted Because of COVID-19
On March 30, 2020, the company filed for bankruptcy under the law. In this context, EY appointed as the Licenced Insolvency Trustee. The company also said to customers that it had no choice but to go into administration. The customers had failed to meet their obligations, mainly due to changes in the foreign exchange market caused by the pandemic.
“In addition, some of our customers, including those who owe substantial amounts to EncoreFX, have notified us that they are initiating foreign administration procedures themselves. It will prevent the timely payment of amounts due to EncoreFX.”
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