Regulation Takes Its Toll
FinanceMagnates Tracks Massive Decline In Binary Options Activity
FinanceMagnates working in conjunction with CPattern has developed a tracking tool for the binary options industry that is quite telling. Referred to as the FTD or First Time Deposit benchmark this tool tracks not only the number of depositors but the amount and averages. According to them the binary options industry is in meltdown and that is evident in the number of brokers who’ve closed and others who’ve quit binary in favor of CFD’s and forex. While it does signal a massive change in the industry it is a good one I think and one that will help binary options continue on into the future.
The reason for the decline is because of intensifying regulation. Regulators around the world have stepped up to combat fruad’s related to binary options and that is fantastic. It has led to a decline in successful scams along with the arrest of individuals in the US and abroad which in turn has led to less deposits. It makes sense that if you cut out the fraud there will be a decline in deposits. According to FinanceMagnates total activity for binary options deposits and withdrawals has fallen more than 50% in the first half of the year. Average deposit size is also on the decline, falling more than 80% since the first of the year.
The Warnings Keep Coming
The Manitoba Security Commission has issued a warning against GTOptions. The warnings is in effort to protect consumers throughout the province from investing with this unregulated broker. GTOptions is operated out of Bulgaria and not regulated by any authority that we know of. The MSC added the broker to its black list due to operating in an unregistered manner, failure to comply with Canadian and provincial regulations and soliciting Canadian citizens without authorization.
Spain’s CNMV, the Comision de Nacional del Mercado de Valores, has issued warning against broker GSI Markets. GSI Markets offers a variety of trading options including binary and is not regulated in Spain or anywhere else in the EU. The CNMV also warned about three subsidiaries doing business for or on behalf of GSI Markets. These are Media Soft Limited, Netsoft Limited, and Netmedia Markets OU. GSI Markets was also warned by the British FCA for illegally soliciting citizens of the UK. The warning included allegations of operating financial services, another no-no for non-registered companies.
The Bottom Line
While it is evident that regulation is taking a toll on the binary options industry the flipside is that what’s left is, hopefull, better and more trustworthy than ever. Operators such as IQOption have pared back their offerings significantly and what they have has taken on the look of exchange traded NADEX binary options. This means that traders have less choice of broker but the trading is more flexible than ever. The only question is will it last. NADEX has been able to maintain business through the rise and fall of EU style trading, hopefully some of the EU and other brokers can withstand fallout from the meltdown.