Binary Options News – CySEC Making Binary Options Safer
The Cyprus Securities and Exchange Commission (CySEC) seems more determined than ever to make Binary Options a safe and transparent trading environment for us traders. That’s excellent news, but… there’s no “but” this time. It’s excellent news, period. Next we will focus on the upcoming changes, how will the brokers accept them and maybe most importantly, how will they affect binary options traders.
Transparency? I’ll Have Two, Please!
Through one of their latest circulars, the CySEC is implementing historical quotes and the ability for clients to see bid/ask prices. It is clearly a step towards preventing price manipulation and it’s also proof that CySEC is finally starting to show some teeth and to address the most important issues of the industry. It’s true that they’ve already started to issue fines and warnings a while back but they shouldn’t stop there because a warning is not such a big deal and a fine… well, that usually means that the brokerage just has to be more aggressive with their clients so they can make the money back.
The display of bid and ask price, historical quotes, and expiration calculation methods is a big step towards transparency and ultimately a safer environment but do not think it’s something amazing and out of the ordinary. This kind of information is available on most financial instruments and it’s very normal – nobody is making a big fuss about the ability to scroll back on any financial chart (and in case you didn’t know, that’s what “historical price” means). All this just goes to show how basic and barebone the industry is right now and how many improvements are needed but at least it’s a step in the right direction.
Brokers’ Opinion
Brokers are rushing in to praise these new changes, welcoming them wholeheartedly. A Banc de Binary spokesperson commented to Finance Magnates saying “We applaud any change that deepens the transparency, the knowledge and the control offered to clients […] ” while an IQ Option representative mentioned “We applaud the changes and are going to fully comply with the new requirements of the regulator. The industry itself is now threatened by the practices of some unfair brokers. We are constantly facing these issues and have to work with PR to tackle the problem face on. […]”. It is worth mentioning that IQ Option was already displaying historical quotes, long before CySEC’s circular.
The Platform Providers’ Response
A big part of implementing these new regulations will be played by the platform providers because they are the ones who actually have to make the changes to the platform that the brokers are then going to offer to clients. Some brokers are using their own proprietary platforms and where that’s the case, they will have to adjust to meet the new regulations (this is the case with IQ Option, StockPair, etc.). Fortunately but not unexpectedly, the platform providers are eager to comply and some of them have already started working with compliance officers to ensure that all changes are implemented in a timely and smooth manner. Both platform providers and brokers have a lot to gain if clients feel safer because currently a lot of them are scared by the scams and the lack of transparency. If clients are not feeling confident, they will invest their money in other venues, a fact that will eventually hurt the brokers and tech providers. If there are no clients, to who are the brokers gonna sell binary options? And if there are no brokers, to who are platform providers gonna provide platforms?
How Will These Changes Affect Clients?
Whenever the degree of transparency goes up, scam goes down. Needless to say, that’s great for clients who will benefit form a safer environment. Some have argued that binary options are known for their simplicity and these new changes will take away some of that simplicity but honestly, I don’t see how that can happen. I don’t see why having the possibility to scroll back on a chart will make it more difficult for me to trade. Also, if I have information about the expiry calculation, does that make trading binary options more difficult? I don’t think so. Knowing there’s a bid and an ask price hinders me from placing a Call or a Put? Nope. What all that does is prevent price and expiry manipulation but also it means that only the bigger brokers will remain in business because it takes time to implement all these changes. And we all know that time is money. Maybe there are too many brokers and maybe it’s time for some of them to go away.