CySEC tightens the rules for binary options trades

CySecOn 14th of April 2016 a very interesting thing occurred. CySEC sent a circular to all of it’s regulated brokers, in which they mentioned, among other things, four basic rules every broker has to obey from now on. The rules are namely new regulatory conditions, quoted prices, the sale of options and short-term options.

The server Finance Magnates informed about it in its article, which carries a fitting name “CySEC’s new regulations will drastically change the binary options platform,” and so did the CySEC official website (the entire broadcast is here). So let’s look at it more closely.

New conditions for regulation

New requirements issued by CySEC change the approach to our brokers and their clients a little. Under these requirements, the binary brokers must provide all traders with adequate information and explanation of binary options, explain all risks included and change their approach, so that the business is fair for traders. Although this is common sense, not all brokers act according these rules.

If a broker wants to continue to be regulated by the CySEC regulatory authority, they must also stop providing trading of 30-second binary options, which I think is a very important step. Everyone certainly knows that 30 second binary options are worse than roulette and other types of gambling. 🙂

If you want to gamble, why don’t you play casino games?

Information about quoted prices

Another change that has to be implemented in binary options platforms is: fully transparent quoted prices. Thus, if the broker offers to trade with oil, they will have to inform their traders exactly what price it is. It is not enough just to say that it is the price of oil. From now on, it must be disclosed where the price is obtained from (for example: TI Crude Oil (Dec 15) NYMEX.)

Newly CySEC has also mentioned that it expects a smooth display of current prices updated every second. The price will, therefore, have to be updated frequently so we, traders, always know where we stand.

Chart clarity and awareness of the traders

Binary Options CySec

An excerpt from the circular

As you can read in the circular, platforms will also have to provide charts which are accurate, easily readable and understandable for the average trader. However, I think, that most brokers don’t need to worry about it. Charts on the SpotOption platform, which is probably offered by the most brokers (eg. optiontrade or Banc de Binary) are understandable and clear in my opinion.

Buyout out of options with no loss

Out of all the new rules, I like this the most. Every trader should now be able to sell any purchased option within few seconds after buying it – thus canceling the trade. With 100% payout, without loss. Actually, I know that TopOption has already implemented this feature.

This option comes in handy if the trader misclicks and confirms the trade of the wrong asset, or the wrong amount. And I must admit – this happens to me sometimes and I’ll bet my shoes I’m not alone. 🙂 I believe that these changes will be a big improvement and I applaud CySEC. What is your opinion on these changes?


J. Pro

More about the author: J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn't very successfull with dropshipping on Amazon and other ways of making money online, and I'd only earn a few hundreds of dollars in years. But then binary options caught my attention with it's simplicity. Now I'm glad it did because it really is worth it. More posts by this author

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