Regulation Hurts Binary Options As Much As It Helps
Revenue and profit continue to decline in the binary options industry. This is directly related to the global crack down on frauds, scams and unregulated, unlicensed brokers. The good news is that this means there are a lot less scams and fraud than there used to be, the bad news is that legit brokers are hurting from negative sentiment and causing a shortage of safe, trusted brokers for those of who want to trade. The latest news shows that SpotOption, the industries largest tech provider and sponsor of what used to hundreds of brands, is not immune.
According to a report in TheMarket, an Israeli based media outlet, citing insider information and a financial statement provided by accounting firm BDO, SpotOptions revenue grew marginally in 2016 but were hurt by numerous factors. Total 2016 revenue came in at $47.8 million USD, up roughly 25% from the year before, but bottom line profits shrank by a full 5%. Considering the fact that Israel, among some others, has banned the exportation, marketing and use of binary options we can only assume these numbers will worsen for the current year.
The South African Financial Services Board has joined the fight against binary options fraud, enacting regulation of the industry within its borders. To date, the regulator does not recognize licensing or regulation from foreign agencies which has resulted in a raft of warnings. The latest is against Stockpair.net. Stockpair.net is the Belize regulated arm of Stockpair.com, a CySEC regulated broker, and not licensed to operate with South African citizens.
Both Stockpair.com and Stockpair.net have received warnings in the past from Canadian and French regulators. In the case of Canada it is no surprise as binary options are not permitted within the country or any of its provinces. When it comes to warnings it is the most prolific issuer. Looking to the French warning cited by FinanceMagnates, it is against the .com version and dates back to 2014, before it became CySEC regulated. The South African FSB regulates under the Financial Advisory and Intermediary Services Act of 2002. South Africa is one of the worlds top ten capital markets and a long time target of the binary industry.
MagnumOptions, a long time operator and broker of dubious quality, has closed its doors. Rather, it had its doors closed for it. This is in response to repeated warnings from multiple regulators, and criminal actions taken by the UK’s FSA. The FSA has seized the assets of the broker and the business entity operating it. Hampshire Capital, successor of Solaris Capital, is a Bulgarian registered business entity accused of operating without a license, using aggressive and predatory marketing practices and aggravated fraud. The company is now in forced liquidation while authorities dig deeper into the scheme. Solaris Capital is also in provisional liquidation pending the outcome of the investigations.