Cysec and binary options brokers
CySEC, as a financial regulator, is tasked with oversight of the financial industry based in Cyprus. The commission is administered by a five-member board. CySEC's mission is to ensure investor protection and to develop healthy competition in the securities and the financial markets. Its responsibilities include constantly monitoring the financial businesses registered in its jurisdiction.
The commission also conducts audits on the licensed entities and has the power to revoke licenses. CySEC regulated brokers, as a result, have grown to be more trusted among the retail trading industry, which includes forex and binary options traders. This comes amid a host of new measures undertaken by CySEC to ensure fairness and transparency among the financial institutions licensed with the authority.
In fact, the watchdog is well known for sending its warning letters to the investment and financial services companies and, in some cases, withdrawing licenses from some of the businesses it regulates. Following the strong growth in the binary options trading industry, CySEC was the first financial regulator to move toward recognizing and bringing binary options trading under its jurisdiction. Binary options were classified as financial instruments in , and thus, businesses that offered binary trading to retail clients had to obtain CySEC licenses.
The move came amid a plethora of various binary options white label operators. At that time, hundreds of binary brokers were operating across the globe, and many of them obtained the newly created licenses. With the growing pressure from local financial regulators in France and Belgium, CySEC was forced to tighten the binary options industry.
Following an overhaul on laws governing over-the-counter financial instruments through Dodd-Frank, the CFTC and SEC imposed tougher laws on the industries that scared most brokers away.
Through keen supervision and tough penalties, cases of fraud were reduced, leaving only the most trustworthy brokers in operation. Right now, there are only 2 regulated binary options brokers licensed in the US, and there are few cases of fraud.
The good news is that they have not determined to ban the industry, yet. As the chairperson of CySEC said, they are still in consultation, probably even with some of the largest binary options brokers.
If these brokers and the regulator can agree on more favorable terms, the industry may remain active, possibly even thrive, while still protecting the traders. Stay up to date with the financial markets everywhere you go. CySEC cracking down on the industry Over the past year, CySEC along with other financial regulators have toughened laws governing the Forex and binary options industries. How could a complete ban on binary options affect the industry? Cyprus has become It also would not be the first regulator to put a ban on binary options.
Comments 1 comment s Click here to cancel reply. Leave a comment jesusrcc. Banning binary options instead of looking for ways to force brokers to comply with regulations and to spread information about unregulated brokers to future traders, looks to me the way to avoid the consequences of their own incompetence.
In response they have taken on hard line approach that many see as a good thing for the industry. One of the many issues impeding the advancement of binary options trading is the method in which call-centers operate. For the most part, regulated brokers use third party marketing agencies to handle advertising and client acquisition. These centers can be but are not always located outside of Cyprus and the EU and use untrained, unlicensed employees to reach out to clients.
Complaints include misleading clients to the risks of trading and high-pressure tactics used to compel deposits. Countries such as Israel have outright banned the operation of brokers in their jurisdiction because of this, others like France and Canada actively warn against unregulated and fraudulent brokers. This is when a CySEC regulated broker uses a broker registered, headquartered or regulated in another country to draw clientele, trade and provide liquidity for trading.