10/13/2016

The CySEC is tightening the regulation of binary options brokers

The CySEC is tightening the regulation of binary options brokers

Cyprus has become quite the global hub for the European binary options trading industry ,Nowadays the majority of regulated brokers in the binary options industry are under the supervision of CySEC (Cyprus Securities and Exchange Commission). CySEC is part of the MiFID, the EU Markets in Financial Instruments Directive, provisions, which is the law governing harmonized regulation between all the European Union members. This means that CySEC regulated brokers have immediate access to every market that complies with MiFID.
The industry is booming all around the world. In the Far East, the United States and all across Europe, online binary options trading is spreading and growing in popularity over the last decade, although precise figures are hard to tell. The two major trading platforms developers, SpotOption and TechFinancials, which supply technology to online brokers, claim they handle a combined $8 billion in volume annually. As the popularity of binaries soared so has grown the number of new rogue companies which entered the market exploiting the loose regulation requirements by the CyEc and causing losses to traders .
In the past few months, the regulation of the binary brokers in Cyprus has been tightened. Up until the last month, the conditions of the Cypriot law allowed brokers to leverage their capital by categorizing their ICF expenses as ‘exposure to public sector entities’.

The CySEC has ruled to uninstall the provision in order to bring the contributions in line its aim of acting as a prudent supervisory authority. According to the CySEC , capital adequacy of financial institutes ,including binary options brokers, should not be dependent on their ICF contribution.
This ruling is expected to cause the smaller brokers to exit the binary options market,and by doing so leaving more market share to the big and established providers.
As this type of investment becomes more popular, experts except for the trend of growing regulations on this industry to continue.
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