Binary Options Trading Just Got Tougher

Regulators Switch Focus, Brokers Join Forces

If you didn’t know it, trading binary options was hard enough to begin with. Sure, it is a simplified form of trading but that doesn’t mean squat in terms of technical analysis, fundamental analysis, trading signals and profitability. Binary trading is easier, but trading is hard. On top of that the industry is sketchy; there are very many great brokers offering an entertaining and reliable trading experience but there are 10X that many shady brokers, fraudulent signal services and unscrupulous internet marketers preying on greed and fear to induce deposits, trading and losses. What the regulators have started to recognized and to address is that much of the frauds being perpetrated today originate with third advertisers and marketers and not with the brokers themselves.

CySEC’s push to regulate the industry deserves most of the praise when it comes to keeping the brokers in check. Yes, there are still a lot of unregulated brokers flying low under the radar but in terms of readily available, reliable, regulated, legal and accountable binary options trading in the EU there are just too many brokers to choose from to waste time with an unregulated and unknown broker and this is where the scams come into play. Binary options traders who understand what trading is, what binary options are, how the industry works and the risks involved can easily make a good decision for themselves when it comes to choosing a broker, accepting a deposit and trading their account. It is the uninitiated, the unknowing, the naive and the vulnerable with no knowledge of trading or binary options who most often fall prey to shady marketing practices.

Ban On Binary Options Advertising

The problem for us traders is that the local regulators, the nation specific agencies such as France’s AMF and Italy’s ConSob, are taking aim at the marketing aspect of the industry irrespective of the individual brokers and their regulatory status. France is the first, but not the last, to enact such laws. The AMF has instituted a ban on binary, forex and CFD advertising for products with leverage greater than 1:20 following a report to parliament outlining the +4 billion Euros French citizens have lost to fraud over the past 6 years. The law will effect all forms of advertising including digital, email, television and other despite the legality of trading these types of financial products. There is some controversy surrounding the law as well, due to the fact that trading binary and forex is legal and regulated in France.

The Netherlands has followed in France’s footsteps, initiating a ban on forex, CFD and binary options advertising, and more are sure to follow. The Netherlands move follows a Q&A session between the finance minister and parliament In his comments he referred to binary options and other high return investment vehicles as “toxic” suggesting a full ban was on the way. However, like in France, the method in which the ban will be effected is in question and has yet to be finalized. The upcoming implementation of MiFID II will bring new regulations and perhaps make it easier to control the industry.

The Future Of Binary Options

Leaprate, in an exclusive story, revealed that the industry is fighting back so don’t worry, we’ll still be able to trade. Leading brokers and platform providers in the forex and binary options industry are forming an industry group to represent and lobby for the sector. Their intention is to represent the legitimate side of trading, free of aggressive marketing tactics, and help institute a shift of deposits from unregulated to regulated brands. Leaprate reported that about 50 brokers and technology providers held a meeting in Cyprus to set an official agenda including how to handle regulated brokers operating unregulated subsidiaries, technology providers selling to and supporting unregulated brokers, call center operations and practices and marketing channels (affiliates and third party advertisers).

The final outcome is yet to be seen but for sure, the landscape for unregulated brokers, aggressive marketers and scam artists is going to get harder and harder to navigate. On one side we have the regulators cracking down hard on all binary options, on the other we have the regulated industry fighting for their rights and the rights of legitimate traders. In between we have a shadow industry of scam artists and con men. I wonder who will win but I have a feeling it won’t be the scam artists and con men. Until then choose your broker wisely, opt for regulated over unregulated, be wary of false-regulation scams and keep having fun trading binary options.

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