Will CySEC ban Binary Options, CySEC chair Demetra Kalogerou suggested in her iFX expo Cyprus speech? Or it is just another word with no action back up?
26 May, AtoZForex – CySEC chair Demetra Kalogerou managed to attract attention on herself and CySEC with the disputed Binary Options regulation. In her speech during the iFX Expo Cyprus, Mrs.Kalogerou commented that CySEC is considering banning Binary Options.
Ok, let's go a little backward, the iFX expo. This year's expo was quite attractive with the vast variety of topics covering - Affiliate Marketing for FX and Binary Brands, Trading Technology, The Evolution of Payments, Forex trends by Google, Brand Awareness vs. Direct Response, Regulation, Blockchain and much more.
Demetra Kalogerou comments on Cypriot financial sector
Moreover, some of the top representatives of Cypriot financial sector have shared their views on a modern financial world. The Chairwoman of the Cyprus Securities and Exchange Commission (CySEC), Demetra Kaloregou, has also attended the event.
Mrs. Kalogerou has emphasized in her speech that CySEC is striving to ensure high quality and transparent investments across the market. She has added that CySEC is developing a special mechanism to scrutinize marketing and activate complex financial instruments. Mrs. Kalogerou has continued:
“Players in the industry will have to decide if they want to play by the rules.”
Continuing her speech, CySEC chair has commented her opinion about the CySEC Bonus ban circular. Mrs. Kalogerou has added:
“It is uncommon that a firm incentivizing traders to trade in high-risk tools will do it honestly.”
She has stressed the importance of understanding the difference between fair and aggressive marketing. According to her comments, CySEC will look into monitoring and intervention of the financial products. CySEC head also highlighted that the regulator will introduce stricter rules on firms that offer complex investments. She noted:
“We lowered the leverage to 1:50. Those who want to raise leverage will have to make sure the client passes a test and is not trading with sums that exceed their funds.”
Will CySEC ban Binary Options across the island?
One of the groundbreaking comments from Demetra Kalogerou sounded as follows:
“We are considering banning binary options but we’re still consulting about it.”
But why would CySEC ban Binary Options?
Mrs. Kalogerou has outlined the main problem with Binary Options in Cyprus. Specifically, she stated that the conflict of interest and non-transparent pricing practices appear as the key issue within the sector.
Overall speaking, the binary options regulation limbo has enabled many bucket shops operate aggressively. Indeed, some of these under-regulated entities have used the Financial Product name so much that now, Forex industry is in question as well.
Most of these entities would push their limits to such extend that, they would try to partner with leading media agencies or sporting entities. Of course, promoting a product is not against the law, however, ignoring the risks and painting a vision that such risky product is a once in a lifetime opportunity, is against the law. To cut it short, most of the Binary Options promotion is playing with the greed urge of the users. End result? People lose all of their investment, and in some extreme cases, they even consider ending their life. An example of such tragic event would be a Canadian trader killing himself after 23Traders lost all of his money.
What are potential consequences if CySEC bans Binary Options?
Demetra Kaloregou stated that it is quite possible that the Binary Options products might be offered only to professional traders, considering the riskiness of this investment type. Moreover, she has added:
“The new supervisory plan will take measurements of onsite checks to make sure of compliance.”
However, the question here is that, why would a professional trader trade binary options? Professionals trade "vanilla options."
Would the Binary Options Scam go offshore if CySEC bans Binary Options?
The scope of the potential CySEC Binary Options ban is still unclear. However, if CySEC were to ban Binary Options, it would likely push the binary options scammers to offshore jurisdictions.
We believe that regulators should give correct regulatory status for Binary Options brokers. This view of ours is especially due to the background of Binary Options traders. Binary options traders are often from the non-finance background. Most of the cases, Binary options traders are attracted to trade via an affiliate in the process. These affiliates also ignore the riskiness of the highly risky Binary Options.
Meanwhile, Demetra Kalogerou has also stressed the importance of the upcoming MiFID II regulations. She stated:
“MiFID II will try to decrease consumer complaints.”
In the end, CySEC chair has talked about Fintech and Blockchain – two trends that are at their peak right now. She stated that the regulator is now developing the framework for the supervision of these technologies.
Will CySEC ban Binary Options?
Will CySEC ban Binary options or it is just another wordy commentary? Of course, I am not able to come to a conclusion on this subject. However, given so many Binary options fines and warnings, regulators must come to a common agreement soon or later. It is likely that there will not be a binary options ban, however reclassification of regulation and licensing as a gaming/gambling product.
Will CySEC ban Binary Options? What is your vision? Let us know in the comments section below.