CySEC proposes sweeping changes for binary options industry regulation

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As part of the EU, Cyprus built its reputation as one of the key financial centres in the European Union. It has also quickly grown to become the top regulator of forex and binary options brokerages wanting to operate in the EU. The popularity of CySEC binary options and cysec a result of a business-friendly tax regime and the ease of operating a financial service in the region.

As part of the EU, Cyprus-regulated firms can legally offer their financial services, such as binary options and forex trading, to EU residents, thus making it an ideal regulator for most brokerage businesses in Europe.

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 binary options and cysec 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 binary options and cysec were classified as financial instruments inand thus, businesses that offered binary trading to retail clients had to obtain CySEC licenses. The move came amid a plethora of various binary options and cysec options white label operators.

At that time, hundreds of binary brokers were operating across the globe, and binary options and cysec 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. Inthe Cyprus commission implemented binary options and cysec rules, mostly concerning the advertising and marketing tactics that brokers can use in targeting new clients.

The new regulations led to most binary companies shutting down. Although brokerages regulated by CySEC can offer their services to most of Europe, the companies are also required to adhere to the regional laws enforced by the respective financial institutions. Despite the stiff regulations, there are still brokers that continue to offer binary options to EU retail traders.

Such brokerages need to follow not only the CySEC rules but also to adhere to the regulations in other European countries. AMF is the regional financial regulator for France.

Working as an independent body, Binary options and cysec regulates all financial businesses registered in its jurisdiction. The French regulator also aims to safeguard the interests of the French residents binary options and cysec a series of measures, which include banning illegal financial products and conducting investigations.

Bythe AMF mandated changes to the retail brokerage business, including forex and binary options. These mandated changes included banning all electronic advertisements targeting French citizens for forex, CFDs and binary options products.

The AMF is also very active in issuing public warnings against binary options and forex brokers that continue to offer their services unregulated in France. BaFin is the Federal financial supervisory authority for Germany. As with most other financial supervisory institutions, the BaFin is tasked with ensuring market integrity and regulating the offer of financial products.

Among the series of measures taken, BaFin stated the above service binary options and cysec must ensure negative balance protection. The rules were implemented in early Augustand the regulator joins the ranks of other regional financial regulators in the EU that have come down strongly on the OTC trading industry.

Although the above conditions are restrictive for binary options brokers, the rules and regulations imposed by the financial regulators are in the best interest of the traders.

There are numerous examples of how traders were not paid or were scammed. In binary options and cysec of these cases, the culprits were the unregulated or offshore companies.

As a binary options trader, it is in your best interest to carefully scrutinize the broker that you want to trade with. Choosing to trade with a CySEC regulated binary options and cysec will ensure your money is protected in a segregated account and the broker cannot block your withdrawals for no reason.

Skip to main content. Binary options in the European Union 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. Benefits of trading with a CySEC regulated broker Although the above conditions are restrictive for binary options brokers, the rules and regulations imposed binary options and cysec the financial regulators are in the best interest of the traders.

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It was a major announcement for the binary options industry, especially coming from the most popular regulator in the world. Over the past year, CySEC along with other financial regulators have toughened laws governing the Forex and binary options industries.

This was a response to the numerous claims of frauds in the industries by aggrieved clients, especially in the binary options industry. We have already seen changes in the Forex industry that have limited the amount of leverage offered to clients and the eradication of trading bonuses. MiFID II also proposes a lot more changes, all of which aim to make these over-the-counter industries a bit more centralized. If the Cyprus regulator were to impose a total ban on binary options, it certainly would affect the industry.

It also would not be the first regulator to put a ban on binary options. Belgium and France have already banned all over-the-counter markets including the Forex market. Netherlands have banned all forms of advertisement on binary options and Forex. These are all part of a global war on binary options that CySEC has suggested it may join. Being the most popular regulator of binary options, a ban on the financial instrument can cripple the entire industry. However, it will certainly not kill the industry.

When Netherlands banned the advertisement of binary options and Forex, the action only drove the brokers underground. Despite the ban, brokers can still sign up clients based in Netherlands. Since the industry is decentralized, it is virtually impossible to completely shut it down. Moreover, a ban could have a negative effect in that unregulated brokers take the opportunity to fill the gap left by the regulated brokers. Therefore, a ban on binary options by CySEC may leave the traders open to solicitation by unscrupulous, unregulated brokers.

A better approach would be through stricter regulation, as the CFTC did. 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. Get the most recent news at your inbox Stay up to date with the financial markets everywhere you go. Sign up for updates.

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