FMA Cancels Rockfort Markets’ Derivative Issuer Licence Following High Court Appeal

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has cancelled Rockfort Markets Limited’s1 (Rockfort) Derivative Issuer (DI) licence. The cancellation took place on 19 July 2024.

The FMA initially decided to cancel Rockfort’s licence in March 2023 because it was satisfied Rockfort materially contravened its licence obligations. Rockfort appealed the FMA’s decision to the High Court and obtained orders preventing publication of any information relating to the case.

Rockfort argued it only breached four of its licence obligations, that the breaches were not material, that the FMA was wrong to find it no longer met the requirements for a licence, and that a more lenient regulatory response would have been sufficient to deal with its non-compliance.

Justice Edwards dismissed Rockfort’s appeal on the above points in November 2023. Rockfort appealed the High Court judgment to the Court of Appeal and the non-publication order remained in place; however, it has now discontinued its appeal and the FMA can publish the case.

Reasons for cancellation

Rockfort’s licence was cancelled because the FMA was satisfied Rockfort materially contravened eight of its licence obligations. They included, but were not limited to:

• Failure to comply with a Direction Order issued to Rockfort on 3 March 2021.
• Failure to maintain adequate and effective systems, policies, processes, and controls to ensure compliance with its obligations under the standard conditions of its licence (including in relation to its advertising) in an effective manner.
• Failure to maintain the same or better standard of capability, governance, and compliance as was the case when the FMA assessed Rockfort's initial licensee application.
• Rockfort’s product disclosure statement did not contain mandatory information relating to hedging counterparties.

The FMA found that Rockfort was no longer capable of effectively performing the role of a DI. The FMA also had reason to believe that Rockfort would be likely to contravene its market service obligations in the future.

The FMA engaged with Rockfort in 2019 and 2020 in relation to potentially false or misleading advertising. On both occasions Rockfort did not fully comply with the FMA’s requests to remove the advertising. In March 2021, the FMA ordered Rockfort to remove what it considered to be false or misleading advertising on its website. The advertising in question suggested Rockfort was licenced to provide forex and share broking activities when those were not covered by its licence. The FMA subsequently found the advertising remained on Rockfort’s website in August 2022.

FMA General Counsel, Liam Mason, said: “Removing a market licence is one of our most significant interventions. In this instance, due to the serious and widespread nature of the contraventions, Rockfort’s compliance history, and the fact the FMA failed to see any improvement following our earlier actions, the FMA believes that Rockfort is not fit to hold a licence. Cancelling Rockfort’s licence is an appropriate and proportionate response to the multiple, material contraventions of its licence obligations.”

The FMA imposed additional specific conditions and requested Rockfort close out the few remaining open derivatives contracts it had with customers ahead of the licence cancellation.

Notes

1Rockfort Markets changed its trading name to RockGlobal on 15 May 2023.

Rockfort was issued a DI licence by the FMA in 2018. The FMA cancelled Rockfort’s licence under section 414(3) of the Financial Markets Conduct Act 2013.

© Scoop Media