New Zealand's Financial Markets Authority (FMA) has ordered licensed derivatives issuer Rockfort Markets to remove or modify misleading advertising statements on its social media channels and website.

Rockfort Markets has been ordered by New Zealand's FMA to rectify allegations of false advertising that misled investors

According to Rockfort's Facebook ads and certain statements on its website, the derivatives trading gave investors the impression that it was "safe," or that the risks were not balanced. Indeed, derivatives trading, particularly the contracts for Difference (CFDS) Rockfort offers as direct investments, carries its own risks.

Rockfort also claims that it is not a legislative requirement to separate client funds from working funds, which it does, but in fact it is a legislative requirement that derivative issuers should comply with. In addition, Rockfort claims to be a licensed "currency pair and stock broker," but it only holds a derivatives issuer license, and New Zealand does not have a specific currency pair and stock brokerage license.

Under the regulations, advertisements for regulated financial product offers must include a prominent statement, the Offering Product Disclosure Statement (PDS). The FMA found that some of Rockfort's ads did not include this claim, while others were inconsistent with the product disclosure statement. The authorities believe that Rockfort's material may violate the FMC Act, in particular the "fair dealing" provisions and the advertising requirements of regulated offers.

The FMA has previously issued a rectification request to Rockfort, which has made some changes or removed its advertising material, but the regulator believes its concerns have only been partially addressed.

Under section 468 of the FMC Act, the FMA has again issued a direction order to Rockfort, directing the company to remove or modify the specified marketing materials. And put forward the following requirements:

Clearly state, rather than downplay, the risks involved in derivatives;

It is prohibited to state that Rockfort holds and uses investor funds in excess of regulatory requirements;

It is prohibited to state that Rockfort has been licensed or regulated by the FMA to offer services or products not covered by its Derivatives Issuer (DI) license.

Clearly state available product disclosure statements.

Following the order, Rockfort has certified to the FMA that all of its current advertisements have been removed or modified to comply with the order. In addition, the company must be certified again within three months to ensure that all its marketing materials comply with the requirements of the directive.

James Greig, director of supervision at the FMA, said: "We have a range of measures in place to tackle bad behaviour and by naming the firm we want to reinforce our expectations of misleading advertising material, particularly in the area of high-risk derivatives. Derivatives are generally not a good investment for most retail investors. Derivatives issuers should not create the impression that derivatives are a 'safe' investment when advertising to retail investors."

The FMA is the government agency responsible for financial regulation in New Zealand and proactively monitors and puts suspicious financial firms on a warning list. Over the past two weeks, FMA has warned such as www.horizonlineLIMITED.com, Evorich two companies. Last week, the regulator also introduced a new regulatory regime for financial advice.