Fresh thoughts on the regulation of binary option brokers

While the dust has not yet settled following the reported bankruptcy of Ioption, days after its parent company obtained its CIF licence from CySEC, a couple of other announcements making the headlines in the world of binary options, oblige us to revisit the issue of regulation and air some of our thoughts to you, the visitors at binaryoptionswire.com.

Apparently, on 7th November 2013, the Cyprus Securities and Exchange Commission issued a CIF licence to Tifozi Investments Limited, the parent company of OptionRally binary options broker. This announcement has raised some eyebrows for a variety of reasons. First, because a few months ago, back in January, OptionRally and Tifozi were warned by the financial regulator at the British Virgin Islands FSC for making false claims regarding the fact that they were regulated by the FSC, when in fact they were not.

The fact that this broker got licensed by CySEC a few days after another recently licenced CySEC firm (Ioption) went bust, increases the murmurs over the recent upsurge in licensing binary options brokers by the CySEC in the recent months. An important aspect of CIF licensing, is that because Cyprus is an EU member, and also part of the Eurozone, obtaining a CIF licence means that a broker can conduct business in the EU and with EU customers, in what is supposedly a safe and regulated environment, therefore, in the un-regulated and slightly anarchic world of binary options, where clients are at risk, those brokers who boast that they are regulated and properly licenced by a European regulating authority can, rightfully or not, boast of a comparative advantage and are therefore in better position to attract potential traders, with the promise of stability and safety for their deposits.

Following the crisis in March, when banks closed and Cyprus was a breath away from default and the unprecedented bail-in procedures for Cyprus banks, which hit the country and its reputation as a financial services centre really hard, it could be argued that CySEC’s decision in May 2013, it seems with the agreement of the European Commission, to include binary options in the list of financial instruments that fall within the remit of the relevant Cyprus law, was a way to open up new opportunities for CIF licenced firms and help the country back on its feet.

And the ever-increasing number of brokers filing for and obtaining the CIF licence signifies that this policy decision was a successful one. It is not a coincidence that a Cyprus based financial services advisory firm, namely MAP S. Platis, which was behind more than 60% of the total successful CIF applications for 2013, was recently awarded at a world class conference in Dubai, the title of the best Financial Services Consulting firm in the world.

As it was expected, the flourishing of binary options business with Cyprus as its base, has attracted the comments and attention of other competitors, such as brokers and regulators based in other financial services provision centres, for example the British Virgin Islands and the Isle of Man.

We are not sure if the collapse of Ioption will be just the first piece down and will have a domino effect. We cannot assure you that this failure and the fact that CySEC had licensed them, or the fact that it has now licenced another broker who has faced accusations in the near past, signifies that the CySEC does or does not have its own share of fault or limitations in regulating the industry properly. We do not want to believe that they just saw an opportunity and they grabbed on it. Perhaps we could even argue that the “war” which started by their competitors in other countries, is more of an indication that things are done properly than that they are not.

What we can quite safely discern is that the continuing success and expansion of online binary options trading has rendered the regulation of this market a necessity. On our part, we believe that all traders deserve and should be getting the chance to trade in a secure, safe, transparent and well regulated environment and that they should be safeguarded against opportunists and crooks.

 

As always, your thoughts and comments on this or any other topic are always welcome here at binaryoptionswire and we commit to providing each trader with an opportunity to air their concerns, for their voice to be heard on the topic of regulation or anything else they would like to contribute.

  • Share this post!
Posted by

George Milios

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.

Unregulated brokers and scam-cloned sites: the global hunt goes on

Unregulated brokers and scam-cloned sites: the global hunt goes on

As the online retail forex and binary options industries keep receiving new entrants on a daily basis, the task of regulating all the participants and especially the plethora of brokers becomes even more challenging and daunting. At the same time, the fact that this a lucrative industry with its ...…

Published: Thursday 29 October, 2015

Former binary broker receives two fines by CySEC

Former binary broker receives two fines by CySEC

Calpiaco Ltd, the company behind www.optionsbravo.com, a site that apparently no longer exists, was handed two administrative fines by the Cyprus Securities and Exchange Commission according to an announcement published by CySEC today. The announcement states that during its Board meeting...…

Published: Wednesday 28 October, 2015

CySEC fines ChargeXP Investments Ltd

CySEC fines ChargeXP Investments Ltd

Reporting on CySEC decisions to impose fines on binary brokers and other related firms is turning into a habit for all those writing ab...…

Published: Wednesday 28 October, 2015

Getting the Message Right: Advertising Compliance for Brokers

Getting the Message Right: Advertising Compliance for Brokers

The latest incident where CySEC fined iForex has turned our attention to the topic of the advertising requirements imposed by regulators, to which brokers have to comply. In the ...…

Published: Wednesday 28 October, 2015