Binary options regulators have had a busy year; warnings, new regulators, expanding US markets and more. Are you up to date with the latest new? Read on to be sure!
Regulators Are Stepping Up Their Game
It has been a busy year for binary options regulators. Not only have we seen an upsurge in warnings there are new regulators on the scene with expanded focus and, in some cases, increased cooperation. This is at once a good and bad thing for binary options and traders like us. On the one hand the industry is getting safer. Your deposits as well as your profits are more protected than ever; segregated accounts and third party oversight account for that. On the other it means that some jurisdictions are clamping down on trading in general, making it harder for some of us to access the best platforms and brokers, or any brokers at all.
Warnings Just Don’t Stop
The litany of warnings we saw in 2014 did not end with the start of the new year. Regulators from CySEC through Quebec’s AMF, New Zealand’s FMA and the UK’s FCA have upped the ante adding new and old brokers alike to their respective lists. France’s famed Binary Options Blacklist now has more than 250 names on it. The thing to remember about each of these warning lists are that they are location specific, as in, they really only pertain to the exact jurisdiction from which it was issued. Quebec’s list is a prime example; many of the names on the list are well known and respected brokers, just in other countries. Many of them are in fact CySEC regulated. The complaint, they are not regulated in Canada, is an echoe of what other regulators are saying; these brokers are not regulated to operate here.
Other infractions that regulators are responding to are aggressive marketing tactics, cloning and false claims of regulation. Marketing tactics include high pressure sales pitches along with guaranteed trading tips and broker managed accounts, the first pushes clients into investments before they understand their true nature, the second two presenting serious conflicts of interest. Cloning is another practice regulators find misleads traders; it is when a shady broker uses a name like JPMBinary Options to imply it is associated with the international investment bank JP Morgan. The most serious infractions though are when brokers claims to be regulated when in fact they are not, or claims to be regulated by shadow regulators created solely for the sake of misleading the public.
The US CFTC is also getting on board. The regulator launced a new website in 2015 to help spread the word. The website hosts what they call the “RED” list, an acronym for regulation defecient, a list of all binary options brokers that illegally solicit clients in the US. Remember, in the US it is against the law for unregistered brokers to advertise to and solicit clients but not against the law for citizens to join a broker and trade, a gray area of regulation and source of much confusion. I applaud their effort but must say it falls far short of the mark. As of last check there were only 19 brokers listed, all of which have flown so low under the radar it’s likely you’ve never heard of them.
In addition to the RED list another US regulator has recently joined the regulatory fray, issuing warnings of its own. The FINRA, Financial Industry Regulatory Authority, says that binary options are all to often a fraud, something we’ve known for quite some time. The interesting thing about the warning is that FINRA accepts binary options trading, the point is to caution investors about the risk, and the chances for fraud. The urge US traders to be wary of off-shore providers, not to avoid them, implying their acceptance of the burgeoning international trade.
Officially Unofficial Update : SpotOption Brokers No Longer Accept US Traders
You may have already noticed but SpotOption powered brokers accepting US traders have been closing their doors. This trend came to a head over the summer as the last of them finally quit accepting them. When asked for a response the reply I received, from Dorin Satrin, only said “SpotOption is a technology provider and not a trading website”. Regardless, a message received from CherryTrade clearly stated they were closing their doors due to compliance with SpotOption. The move is likely in preparation for SpotOptions CFTC approved mass launch into the US market slated for the near future. SpotOption, as well as TechFinancials and Tradologic, have been working closely with Cantor Exchange to create trading platforms to interface on Cantor’s exchange style trading platform. SpotOption trading is already available on the Cantor Exchange trading website, more brokers are expected to follow in the 4th quarter of 2015 or early 2016.
Increased Cooperation And An International Man Hunt
Regulators are beginning to cooperate more, especially in the EU. Agencies in member countries are now accepting registration of binary options brokers regulated by CySEC. CySEC regulation was the first and most prominent regulatory body, undertaking the task in 2012, but its jurisdiction has been heavily questioned. Under the EU’s financial charter, MiFID and financial passport a financial business regulated and registered in one country can do business in other member nations. The stipulation is that the businesses must register in each of those nations as required. The catch is that not all EU nations were willing to accept to binary options as financial tools, and some did not even take notice until recently. Now, following a land mark case in the Dutch courts earlier this year, more and more nations are accepting registrations from regulated brokers and further cementing CySEC’s role as top watchdog in Europe.
If simply regulating brokers was not enough, regulators in the UK are still on a manhunt begun earlier in the year. Clint Canning, CEO of FXWorld and BASE2TRADE, fled the country following allegations of fraud. The company’s, one a forex managed account brokerage, the other a binay options trading website, took in millions of investor dollars, all of which have since dissappeared. Several FXWorld employees, including Canning and trader Gary Andrews, had already been suspended from Rabobank for forex fraud and price fixing. Not only were traders fleeced of their funds, nearly a dozen employee’s not connected to the frauds were left out in the cold. Canning is suspected of residing in Dubai and has yet to apprehended by police.