In this week’s Executive Interview, we speak to CEO and Founder of Banc De Binary, Oren Laurent, as he explains his viewpoint about Standing out Among the Binary Options Crowd.
Tell us about yourself. Where did you go to school and work in the past and how your company started.
We'll start from the top about four years ago, give or take, when we started the company, as a young group of brokers, there were four of us, we all came from different fields, there's Forex, Commodities, Indexes or just basic Stock trading. I personally came out of stock trading, a little bit more complicated than that, it was hedge funds and once we started the company the concept was very simple; it was to bring simplicity to trading, which was something that hadn't been done before at that time. You have to understand that we entered the market at a time where it was very hard to penetrate because of the recession, financial heartaches so on and so forth. We used to always laugh and say you're not a real broker unless you've had a grown man cry over the phone, complaining about losing his life savings, and that was what we were experiencing, that was why most of us wanted to get out of the game. I was personally on Wall Street; the other guys came off, whether it was London, Tel Aviv and so on. It was a time that, when we started everybody wanted to be in the market, and so it was very easy for us back then, especially for me in hedge funds where it was quote unquote a sexy product, everybody wanted it, you would pick up a phone to a completely cold lead, some of us had spoken to five years ago and you would tell them where you were from and tell them what that you were offering a hedge fund that would provide him with 10-12% a year and he'd be in with whatever he had. It was that type of time on Wall Street. And the in 2009 not only were our commissions dwindling down, not only was it a personal factor that we'd seen the markets crash, but it was such a public mayhem that we decided that we had to introduce something, that if we weren’t going to introduce something new, if we weren't going to innovate, if we weren't going to recreate ourselves we wouldn't exist. Especially that now everything had been transferred into the online world, where innovation was key, where innovation is your reason for purpose. So when we started the company the concept was first to bring simplicity, anything about binary options, we didn't even know we were going into binary options. Binary options didn't even exist at that point, when we sat down to try and figure out what we were going to do we looked at an enormous amount of products, new products, old products, how we could diversify them, how we could innovate them, recreate them, and put it online for people. And then all of a sudden we ran across a ruling that had been passed by the SEC in 2008 (which is the Securities and Exchange Commission of the U.S) that binary options are to be listed on the CBOT (on the Chicago board of trade) on commodities, and it took us by surprise, and we sat there and wondered “what are binary options?” I mean there's a ruling that allows binary options to be traded in the states but what exactly are they? And we started researching, after about a month of research, we found certain algorithms that allowed us to simplify them because Binary options are a very complicated product. They were called digital options back then and they were a very complicated product because whereas you could only make money on the spread, from the rate that you bought to the rate that you sell at and we looked at it and said “wait a second, is there a way to simplify this?” We found a way to simplify it to the core, we found a way that would let the investor understand what he was trading, understand what he was getting himself into, understand the risks, understand the possibilities, and know the outcome in advance, which was something that the markets hadn't held in almost any financial product to date. Whether the trader was an advanced trader or a beginner he'd be able to get into the market with the top floors as we call them which is one more spreads of leverage, which is important, because especially on the marketing point of view, when we look at it as the explanation of the broker explaining it to the end client. Number 2 was safety, your in the safe zone before you even go in because you know what you're going to risk in advance. Even in Blue Chip stock trading (when I say Blue Chip I'm referring to GE Coca Cola, GM) when everybody thought they were going in in 2006-2007, when everybody thought they were going to make certain profits, they never calculated that the risk would be that high. Take Ford for example, whoever thought that Ford would collapse? Those traders would find themselves at thirty cents on the dollar. That's horrendous, that's ridiculous. In the good old days when you went into stock, especially in Blue Chip, an SMP500 stock, you knew that the fluctuation would be 3-4% up 2% down, that's about it, that’s where it would stop, and you never imagined that a stock could lose 80% of its value. AIG one of the largest international insurance companies in the world, not only insurance but also one of the largest financial institutions in the world almost collapsed due to the recession, this is something that was unheard of until 2009, that didn’t exist, only when you look back to the great depression of 1929 you could see that these type of patterns repeat themselves. Not with the technology that we have today, not with the stream of information that we have today. Instead of taking advantage of that same stream Wall Street kept it hidden with its brokers, when we saw that in Binary Options we could simplify, give you the safety measures and so on we saw that now here's a chance, not only for us to market, to innovate, but a chance for the client to actually have a fighting chance in the market without tremendous experience. If you look at research in the past you see that 90% of traders that go into markets today, not just today, even in the past, 90% are clearly gambling. Now Wall Street needs this. Wall Street needs it as fuel, for every person selling stock someone has to be buying. For every person buying someone has to be selling so Wall Street needs gains and losses. You're talking about a market that trades 28.6 Trillion Dollars a day. So it's fueled by this. Forex trades at four Trillion a day, so there's fuel in this system that has to be burned and kept lit, always. Binary options, the innovation behind Binary options put more investors into the market, the same investors that would never go in the first place. This is why we were able to gather 250000 customers in the span of 3 years of going into the market.
What does cySEC do?
CySEC legitimizes binary options. CySec gives it a license and classifies it as a financial product whereas a lot of financial products in the past were introduced into the markets and were classified as gambling. CySEC legitimizes Binary Options as a financial product and gives us a chance to trade ourselves as an investment house and not as just another online platform. Being an online platform is being another website, is being another marketing product, another thrill for a thrill seeker and that's not what we are. We are a proper investment house, we've always looked at ourselves as a proper investment house, we've always referred to ourselves as a proper investment house, and now we have the government body to back that up, so cySEC gives us absolute legitimacy in the financial market. It also allows us to passport this license into 27 nations, the European Union, where, you're classified now as a financial institution. Past the fact of legitimacy from a marketing point of view the most important part of it is that now clients can rest assured that their funds are safe and being held in segregated accounts, which they were before, but now there's proof to it. Now government institutions will finally start to recognize Binary Options as financial products, classify them as financial products and recognize them for what they are, which is an innovation in the financial markets. Now a lot of arguments can arise saying wait a second, so many financial products were introduced into the markets, so were mortgage bank securities that were a financial innovation. Anybody who knows the story behind mortgage bank securities will know that it was very simple, it was taking a mortgage, making it into a traded product, trading it, and sending it on to other clients. Or you can classify something else, for example life insurance policies were made into financial products, not too long ago, a few years back, which was you could buy a life insurance policy off someone, you would measure how much time he has left to live and you would estimate you would cash in X amount of time that he has left to live and give him cash today. And that in turn was turned by Dean Witter into a financial product. They were called Life Bonds. Each financial product being brought into the market is always being argued, why? Because of the aristocrats of the market, saying let's stay with the old school stocks, bonds and commodities and so on, lets not get too complicated with it. And on the other hand you're looking at entrepreneurs such as myself that know that in order to survive in the financial markets you have to innovate and recreate at all times. We are an online company but we have a huge offline presence, which has to be probably my most important feat up to date, saying that being online is one responsibility, but there has to be a huge offline operation that backs it up. Most online companies are a smoke screen, you can also see Binary option companies that operate under a smoke screen, you do not see a board of directors, nor do you see regulation, nor do you see the CEO, you have no idea where they're located, what they do, what's behind them. Most Forex companies also operate under the same smoke screen. Banc De Binary decided from the get go that we would not. That we would be completely transparent from A-Z. That also allowed us to receive a lot of scrutiny from both clients and other companies out there that you can see don't like us very much because we've changed the game, we figured that transparency is Key. We took what the big boys were doing on Wall Street and innovated it to the online world. There's definitely a lot of scrutiny on us at all times. Whereas with other Forex companies clients don't even have the ability to complain here they have a platform. So sometimes you get the kooks, sometimes you'll get real honest hard-working complaints that can be handled properly, and that would have to be the largest advantage that we have on our competitors is you can even call them competitors today in the Binary Options field. But when I say competitors I'm mostly referring to the Forex field today.
You've already differentiated your brand today even without regulation. How do you see this playing out as other Binary Options companies move to get regulation for themselves?
The main force that we bring to the table is again innovation, not only in the Binary Option field but also in everything around it, not only do we lead the field in terms of the financial products that we produce but also leading the field in everything around, meaning we want to create an environment for the client where the client chooses the environment in which he wants to trade, I want the client to tell me how he'd like to trade and I want to create that environment. It's a long process but it's already taking place, the wheels are already in motion, and we will create that environment by the end of 2013 where you will see that the website and so on is not shifted to our needs but to the clients’ needs. Another very important fact when it comes to leading and so forth is the way that we brand ourselves. Again, we do not brand ourselves as an online company; we brand ourselves as an offline company. That, of course, comes with a lot of responsibilities, a lot of them have to do with extended customer service, always speaking to a live agent, always speaking to a live broker, always having that personal touch which other companies can't afford, or don't see the need, which is very sad because customer service and live agents and human interaction are key today, especially today in a world that is virtual, you're dealing with clients funds, the customer want to know that there's someone real, he needs the personal touch.
I started off as a broker, in various companies, whether Goldman Sacks, Credit Swiss and so on. I started off working for companies that had a massive amount of employees. When I reached the point where I could go off on my own, one of my first decisions was to create a work environment where I would want to work, where I would want to be at. Something that would make me want to get up and go to work every single day, whether my back ached or my leg fell asleep or whatever it was, not just a 9-5 but where I'd want to be at work. I found that the main thing that drives people is not only the pay, money aside it's the creativity that you can bring to the table. If I can allow anyone to release his creative demon then the feeling of fulfillment is there and I'm brought ideas that I'd never have had. My concept was always very simple, it wasn't that I could do everything, I just followed what the big guys did, and I just followed in their footsteps. The lesson I picked up along the way was always put people that are more intelligent and more creative around you and you will succeed.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.