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Derivatives trading service Rockfort ordered to stop misleading punters about risk –

Financial Markets Authority chief executive Rob Everett.


Financial Markets Authority chief executive Rob Everett.

The Financial Markets Authority (FMA) has ordered derivatives trading service Rockfort Markets to remove or change misleading advertising from its social media channels and website.

The FMA said Rockford’s advertising created the impression that trading in derivatives was “safe”, or had not presented a balanced view of the risks.

Trading in derivatives, and in particular the “contracts for difference” offered by Rockfort was inherently risky, the FMA said.

The FMA found Rockfort had other statements on its website that were likely to mislead investors or were unsubstantiated, including: “We [Rockfort] exceed the requirements of the Legislation and keep separate client money from our operating money”, when keeping client money separate is a legal requirement.

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Rockfort also told investors it was a licensed and regulated “forex and share broker”, when these services are not licensed in New Zealand.

It is a requirement for advertisements of regulated financial product offers to include a prominent statement that a Product Disclosure Statement (PDS) is available, said James Greig, the FMA’s director of supervision.


Mostly young and inexperienced investors are flocking to “fractional” share trading platforms and the social media that surrounds them.

Greig said the FMA considered that Rockfort’s materials were likely to breach the “fair dealing” laws convering financial service providers.

He said the FMA initially raised its concerns with Rockfort, but the regulator considered its concerns were only partially addressed by Rockfort

As a result, the FMA issued an order to Rockfort requiring changes be made to its advertising.

The regulator also ordered the company to ensure similar and future marketing materials clearly stated, and did not underplay the risks of speculating on financial markets with derivatives.

Greig said Rockfort had certified to the FMA that all its current advertisements had been removed or revised to comply with the order. The company must make another certification in three months that all its marketing materials comply with the direction order.

“Derivatives are generally not a suitable investment for most retail investors. Derivatives issuers advertising to retail investors should not create the impression that derivatives are a ‘safe’ investment,” Mr Greig said.

In July last year, the FMA published a report on the derivatives issuer sector identifying key risks in the sector and highlighted future focus areas to improve sector compliance.