A derivative could include a futures contract or forward; an option or swap; a contract for difference, margin or rolling spot contract or a cap, collar, floor or spread.
Who needs to comply
Under the FMC Act, you must be licensed to make a regulated offer of derivatives. A regulated offer includes any offer of derivatives when disclosure must be made to one or more investors. For example, a retail investor. See section 41 of the FMC Act.
Derivatives issuers are supervised by the FMA and must comply with the following obligations:
You must provide a written risk assessment of the money laundering and financing of terrorism activity you could expect in the course of running your business.
You are reequired to implement an anti-money laundering and countering financing of terrorism programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
You are required to appoint a compliance officer to administer and maintain your programme
You are required to perform due diligence processes on your customers. This includes customer identification and verification of identity.
You are required to report suspicious transactions.
The FMA has wide powers to exempt persons or transactions from some financial markets law requirements. These powers enable us to remove rigidities in the law and ensure requirements for businesses are reasonable and cost-effective. Find out more about exemptions you can apply for under the FMC Act and current exemption notices.