CySEC Reforms to Standardize Binary Options Trading

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Two of cysec bitcoins and binary options biggest problems with binary options, for regulators and traders alike, is a serious lack of transparency and standardization within the industry. Each platform is different; the way in which the options are traded, payouts are calculated and the types and range of expiry vary greatly which only adds to confusion already caused by lack of transparency.

CySEC has recently begun to take action to address these issues. These changes are meant cysec bitcoins and binary options help standardized trading, increase transparency, give better terms for clients and provide enhanced investor protections.

The proposed reforms now under consultation will enhance the nature, characteristics and trading methodology of this type of retail financial instrument. The new proposed standards regarding the Digital Options Contracts will seek to eliminate the causes of concern regarding the practice that are found commonly to be followed by those providing binary options products, ensuring firms act in an honest, fair and professional manner.

The reforms are intended to achieve 4 main goals. These are 1 to ensure that brokers act honestly, fairly and in accordance with their customers best interests 2 to ensure that adequate information about the products being offered is provided to clients 3 ensure to orders are executed in a manner favorable to clients and 4 to ensure that orders are executed and filled promptly and expeditiously.

The proposed changes are as follows. These reforms all sound really great and bring to mind a couple of things. This means that the brokers will have to change, and most of them will not be able to keep up. The second thing I think of is that the type of trading these changes describe already exists. Reform Is On The Way Two of the biggest problems with cysec bitcoins and binary options options, for regulators and traders alike, is a serious lack of transparency and standardization within cysec bitcoins and binary options industry.

Remove Opaque Strike Pricing — They propose to ban the current method of floating strike prices. The strikes will have to be listed before the trades are made, similar to ladders, and be the same for all traders. Lift Restrictions On Exiting Trades — They propose to have all restrictions on exiting trades lifted. This ties into the pricing, there must be continual two way pricing where sellers know what they can get for closing at any time.

All options will have at least 5 minutes of expiry. CySEC proposes to require all brokers to use the same, CySEC approved, settlement algorithm to calculate pricing and options values as they approach expiry and expire. No individual methodology would be allowed.

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In fact, you will actually find more regulated forex brokers in Cyprus than any other jurisdiction. However, what precisely is CySEC? What regulations are imposed on licensed, registered brokers and how efficient is the regulatory agency? CySEC is the financial regulatory agency of Cyprus. As a result of Cyprus becoming one of the EU members, all registered brokers and licensed companies were given access to European markets. The move had a significant impact on the tax haven regulatory framework that CySEC has previously adopted.

By the time May 4th, had rolled around, the board made an announcement that it was changing the classification of binary options so they counted as financial instruments. All platforms operating in Cyprus had to adhere to the new binary options regulations in 30 days. This was a significant move for two reasons. Firstly, the majority of platforms are found in Cyprus.

Secondly, CySEC became the first regulatory body to recognise and regulate binary options as financial instruments. A board consisting of five members, including two full-time employees, a chairman and vice-chairman run CySEC. CySEC also has links to the government. The Council of Ministers decides on the board of directors after receiving proposals from the Minister of Finance.

In fact, during , CySEC was under attack in the news from traders and industry commentators who thought more stringent regulations were necessary to monitor high-risk investment firms. In particular, there was an argument fines for binary options brokers were too low. Because they were the first to regulate binary options, a huge number of brokers hold CySEC licenses so they can operate within the Eurozone. However, many believe verification and processing times could be much quicker.

However, this does not necessarily mean that a particular broker is regulated by CySEC. CySEC has distributed guidelines and regulations on a whole range of trading activities. This includes bonus circulars, new guidelines for cryptocurrencies, such as bitcoin and directives for money laundering.

In addition to the above, CySEC can also set minimum capital requirements, bonus qualifications and leverage limits. Furthermore, brokers must meet regulations around indemnity insurance and ensure access to investor compensation funds.

Note if a broker fails to meet license requirements, their offices can swiftly receive notifications of fines or even the removal of their license.

Those with contacts in the industry or follow relevant news announcements will have seen there are certain criticisms of CySEC. In fact, they have pursued greater transparency around listed brokers and tougher fines. Furthermore, they have taken more action to suspend and revoke licenses. In addition, a circular said: Also, to tackle consumer complaints, they have brought in a new structure.

For example, new legislation in France was brought in to prevent digital advertising of high-risk investment products. CySEC were then quick to bring out a circular informing companies they would need to adhere to these new regulations when advertising to French clients.

However, they remain a popular body and continue to grow as a result of low barriers to entry and less stringent regulations. Remember before you sign up with a brokerage, always check the firm is one of the approved brokers using their registration number and the official CySEC website.

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