New NZ Gov't Regulation on Overseas Trading Accounts

[SPG]

Has anyone had any recent luck opening an account with an offshore brokerage that provides option trading? Currently trying to get a Tastyworks account opened...would have preferred TDA with their thinkorswim platform but seems they don't want to offer derivatives to kiwis now.

My strategy is to acquire a select few stocks, but may exit and re-enter positions on swings. I will buy longer term options for insurance, and sell shorter term options to hopefully bring down my cost basis / generate cash-flow to reinvest. Right now I have just under NZD 50k available to invest, but given this mixed strategy I’m not sure how to identify any tax considerations to keep in mind...appreciate any tips/tricks/insights from anyone doing something similar.

[stoploss]

Has anyone had any recent luck opening an account with an offshore brokerage that provides option trading? Currently trying to get a Tastyworks account opened...would have preferred TDA with their thinkorswim platform but seems they don't want to offer derivatives to kiwis now.

My strategy is to acquire a select few stocks, but may exit and re-enter positions on swings. I will buy longer term options for insurance, and sell shorter term options to hopefully bring down my cost basis / generate cash-flow to reinvest. Right now I have just under NZD 50k available to invest, but given this mixed strategy I’m not sure how to identify any tax considerations to keep in mind...appreciate any tips/tricks/insights from anyone doing something similar.

Try capital 19 in Sydney, they are good with options.

[SBQ]

Has anyone had any recent luck opening an account with an offshore brokerage that provides option trading? Currently trying to get a Tastyworks account opened...would have preferred TDA with their thinkorswim platform but seems they don't want to offer derivatives to kiwis now.

My strategy is to acquire a select few stocks, but may exit and re-enter positions on swings. I will buy longer term options for insurance, and sell shorter term options to hopefully bring down my cost basis / generate cash-flow to reinvest. Right now I have just under NZD 50k available to invest, but given this mixed strategy I’m not sure how to identify any tax considerations to keep in mind...appreciate any tips/tricks/insights from anyone doing something similar.

As you have read in this thread, the problem is brokerage firms dealing with the NZ FMA. NZ based brokers basically lobbied the gov't to ensure NZ residents to go to NZ brokers to do options and FX trades. You could go to Australia as stoploss mentioned but then again, they would have to be still licensed by the FMA. Many NZ brokers have affiliates in Australian so they may be able to offer NZ residents within the FMA licensing framework. Want to play US equities, then expect to pay more for those trades, especially options trades as the NZ broker would take a cut on top of the US broker. BTW, no NZ broker trades direct with NYSE or Nasdaq. They use a brokerage account abroad no different than what a customer would use having account there to trade. Their fees get transferred on top of their fee cut to the NZ client.

$50K NZD is pretty much the limit you're allowed under FIF to be exempt of taxes. Once you cross over that amount on foreign shares then you have to do complex tax reporting of the account (ie FDR / CR / quick sale / buy calcs). You could open up a joint account and have up to $100K NZD of FIF exemption.

On the grand of things, the NZ gov't has signaled to the international investment community what they want by restricting where NZ residents can invest their $. In return, major firms like GS, TD Ameritrade, and dozens of others have stopped accepting any NZ clients and for some brokerage firms, they've taken retaliation response by not allowing NZX trades. Hence why the dwindling liquidity in the NZX. So when the brokers themselves abroad shut out the NZ equity market, the losers are going to be the listed NZ companies and their investors (look to why Xero left the NZX). It's a very different approach to how Canada & US dealt with cross border trades. I remembered a time in Canada that portfolios must not exceed more than 33% foreign content... now it's wide open and both sides can invest either way and the exchange rates convert with little or no commission.

Whereas in NZ, the introduction of the AML has done nothing to deter cash handling by illicit operations (drugs, gangs, etc in NZ). As my bank manager told me, the ones that suffer under AML are the legit customers through red tape and compliance. Kinda like gun regulations.

[blackcap]

BTW, no NZ broker trades direct with NYSE or Nasdaq. They use a brokerage account abroad no different than what a customer would use having account there to trade. Their fees get transferred on top of their fee cut to the NZ client.

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That is true, but the likes of Hatch and soon Sharesies are paving the way. Hatch allows $3 trades on US stocks and I am sure Sharesies will be competitive going forward. That aside, the FIF rules are a joke and plain theft. Not helping Kiwi's in any way possible.

[SBQ]

That is true, but the likes of Hatch and soon Sharesies are paving the way. Hatch allows $3 trades on US stocks and I am sure Sharesies will be competitive going forward. That aside, the FIF rules are a joke and plain theft. Not helping Kiwi's in any way possible.

Hey! I'm ALL for Sharesies and Hatch to pave the way through and change how investing can be done a lot easier. My aunt has an account with MacQuaries and she tells me they have all sorts of account mgt fees she pays (like 1% of balance) and foreign equities trades cost a lot in commissions. If Sharesies can lower the bar, I do hope that would get more people into investing and therefore, one should not have to look abroad to buy the shares they want. This happened in Canada throughout the 90s when 'discount brokerage' firms from the US took up most of the Cdn customers wanting to trade US equities. This quickly followed by Cdn banks following suit by becoming competitive.

At a recent neighbourhood gathering last summer, I came across this accountant / finnacial advisor and boy did we knock heads. If you think my points were as aggressive on this forum, I was very so in discussion with him; to the point that he had to walk away. "You mean you're a financial advisor but don't know how bad FIF is to individual investors?" another elderly lady told me they would prefer to pay a paper gain tax instead of paying a capital gains tax at the time of sale of the shares. I was trying to explain about deferred taxation in relation to the person's income levels as it's generally accepted that, those age 30 to 60 would have much higher incomes than those age 60 or high in senior age. When you can defer those taxable gains to a period where you have low incomes and at a low tax bracket, it's huge win. But with this FIF, it penalises those that earn $ from their day job, and then pay another tax on the gains from it because the only time a person has money to invest is when they are working. Why penalise them more on the years they're most productive? Unfortunately it was a concept they didn't understand or was lost in translation.