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Thread: US Derivatives

  1. #1
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    Default US Derivatives

    Received a message in my TDAmeritrade account - "Our interpretation of New Zealand's rules and regulations does not allow any trading on derivatives". They have given 30 days to close any open positions. Appreciate if someone can point to the rule and if they are correct? Great platform but this has taken the gloss off it.

  2. #2
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    i dont know the specifics of any new rules, but I had to close my Oanda FX trading account recently too. So now I do all CFD type stuff through CMC which is okay , I guess. I preferred Oanda though
    For clarity, nothing I say is advice....

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    Quote Originally Posted by MDW View Post
    Received a message in my TDAmeritrade account - "Our interpretation of New Zealand's rules and regulations does not allow any trading on derivatives". They have given 30 days to close any open positions. Appreciate if someone can point to the rule and if they are correct? Great platform but this has taken the gloss off it.
    If you read this thread i've voiced my concern on the NZ FMA.

    https://www.sharetrader.co.nz/showth...ading-Accounts

    Be foturnate that TD didn't ask to close your account like many overseas brokers are asking. Technically the FMA rule is ANY brokerage firm that OFFERs derivatives for their clients must be licensed by the FMA.

    I have taken this whole FMA personally and will look to leave NZ with the whole family after my father passes (who is a non-NZ resident and has willed the overseas assets to me). But as my aunt tells me the rules can change, I highly doubt it as most forms of taxation (FIF / FDR etc) never ever get changed.

  4. #4
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    I had the same problem with TD Ameritrade.

    Who can suggest another option for buying options on S&P and VIX from New Zealand?

  5. #5
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    Haven't used them but i've heard very reliable
    https://www.cmcmarkets.com/en-nz/products

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    Quote Originally Posted by smpl View Post
    I had the same problem with TD Ameritrade.

    Who can suggest another option for buying options on S&P and VIX from New Zealand?
    Only within NZ brokers like CMC. But it seems their commission take is far higher than US brokers. I noticed CMC charges additional fees funding an account from funds coming from overseas. Because of the FMA regulations, it means more compliance by brokers and places like CMC just pass on that extra cost to their customers. The real reason is overseas brokers will not comply to NZ's regulation as they would have to do more paperwork, and tax file keeping, on NZ's FIF tax laws.

  7. #7
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    Interesting.

    You would think if the revenue was emough then the extra work would be worth it.

  8. #8
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    Quote Originally Posted by smpl View Post
    Interesting.

    You would think if the revenue was emough then the extra work would be worth it.
    Enough revenue for overseas brokers to keep NZ clients? For a population of 4.6M, and the lack of financial literacy in the country, at best there would only be a handful that regulary do derivatives. Even on the conventional front of buying equities directly would not be a lot as since 911, US brokers have to go through a lot of compliance to open up accounts for foreign residents. Now we have the OECD 'Common Reporting Standard' where financial institutions have to record client's tax #s and do reporting to the releavent country's tax dept., to the US or foreign broker, that spells out a lot hassle to deal with foreign clients.

    As I mentioned before in another thread about this issue, I had some discussions with Mr Cullen about 20 years ago on the issue of NZ residents investing in overseas shares. He said specifically the NZ tax laws have to cover those that explore those areas of residents that could make tremendous capital gains without paying any taxes. However if you look at the workings of FIF, IRD does not have a method for taxing of derivatives. At best, FIF only taxes on paper gains on account balances ; for which a savy investor could structure their portfolio or asset in a futures or options contract to get around the FIF taxing. So this is why today, we have the FMA closing this door on the NZ retail market and channeling them through NZ brokers where IRD has a closer tie for regulations and reporting.

    What i'm seeing in recent weeks is a weaker NZD to the USD caused by more capital outflows of $ leaving NZ. Precursor signs are the lack of liquidity in the NZX sharemarket. It may be US brokers have had enough with dealing with NZ markets that they've basically exited out of the NZX entirely (partly again due to regulations). Diversified managed funds will simply overlook NZ as being to risky, or simply too much of a hassle to invest in. As for local NZ investors in the likes of Kiwi Saver funds? Well that market only buys so much.

    At a share investment presentation some months ago, I saw a presentation of a new managed fund similar to "Sharesies". They had an option for Kiwi Saver investors to allocate their investment to the US S&P500 index. I questioned how does that apply to FIF rules for where amounts invested exceed $50K ? The presenter could not give me a straight answer other than their accounting dept does that. I could not see the tranparancy on their claimed % returns for each specific assets, especially where FIF applied to those that had under $50K (where FIF does not apply), to over $50K where FIF kicks in. Anyways, there's a lot more going for share investments back in N. America for me to worry about what happens in NZ.

  9. #9
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    For those with TDAmeritrade, new message to confirm ending of derivative options and forex trading platform:

    "Dear Valued Client, As we wrote you last month, because of a New Zealand regulatory requirement, accounts with a New Zealand address will no longer be allowed to maintain options, futures, or forex trading privileges as of September 30, 2019.

    There will be no other changes to your service. Your trading platforms, commissions, and interest rates will stay the same. However, this change does mean you are no longer eligible to apply for options or futures and forex trading. "


    What would be the next step for the NZ FMA regulatory authority on NZ residents? Ban foreign trading accounts?

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