2016 Winner – The Crackdown on Binary Options Brokers
Hey, hey, another year is almost over! Some of us have more money in their pockets due to trading and others have less, unfortunately, but as we rapidly approach the end of 2016, I think it’s time to look back and see what it meant for Binary Options. Did it bring any major changes, did the industry become safer, or are we in almost the same situation as last year? And what about regulators? Are they finally starting to play a major role in the industry? I believe they do, but let’s see…
What has Changed in the Binary Options Industry on 2016?
We dubbed last year 2015- the Year Of The FAKE Autotrader but thinking about it, this year has been very “productive” for the software sellers as well. One thing is certain: there are still tens maybe hundreds of free bots and autotraders that can make you rich overnight… Oh, I feel like I’ve written the words “make you rich overnight” thousands of times throughout 2015 and 2016. Our entire team is constantly warning about scam robots like Copy Buffet or NEO2 but this didn’t stop people from using them. The Buffett robot claims to trade based on Warren Buffett’s mind (!!!) which was somehow coded into a computer program that’s not sold for millions but offered free (!!! again). The other one uses solar satellites to predict an asset’s next direction (Science-Fiction much?). These two are just the icing on the cake, but there are tons of other scams that promise… guess what: to make you rich overnight (there, I had to say it again).
Ok so we still have robots and people with “big hearts” that try to make everyone a millionaire and end world hunger but what has really changed? I would say: The Regulators! Finally the regulatory authorities around the globe are starting to acknowledge that binary options are being traded by a lot of people and also that the industry needs a strong hand to slap all the scammers. Basically, they are starting to do their jobs. This is how:
In 2016 the U.S. Commodity Futures Trading Commission fined VaultOptions and Global Trader 365 over $4.5 million for soliciting U.S. Clients. As a result of these fines, both brokers have since gone out of business. Good riddance! This is a perfect example of how the problem should be dealt with across the globe, not only in the United States. Having rules is totally pointless if you don’t enforce them and just getting a slap on the wrist is not enough… but a $4.5 million fine seems to do the trick.
On the other shore of the Big Pond, CySEC is making some waves also: they have implemented tighter rules against price manipulation but also regarding the real names of sales representatives and high pressure sales. Don’t even get me started on that… most brokers have the guts to call clients 20 times a day, saying they need to invest more and they need to trade more. If the clients don’t want to comply the salesmen start to become aggressive and impolite. Also, the names are almost always fake. What, did you believe that your account manager’s name is really John White, Mary Silver or Andrew Do-Good? Nope! And regulators are finally starting to catch up.
Aggressive marketing is also a problem, which was recently addressed in an interview by Demetra Kalogerou head of the Cyprus Securities and Exchange Commission (CySEC). Apart from all these warnings, CySEC is also dishing out fines, making them look more like a watchdog and less than a puppy: EZTrader and Interactive Options received fines totalling up to more than 1 million USD, while the parent company of OptionTRade was fined 105,000 Euros.
The stars of this year’s biggest settlement were the U.S. Commodity Futures Trading Commission and Banc de Binary. The ‘quarrel’ started back in 2013 when the U.S. CFTC sued the firm for soliciting US citizens and it was finalized this year with Banc de Binary admitting defeat. In fact, they neither denied nor admitted the allegations but this type of damage control is normal and besides, they settled for 11 million bucks and I guess that speaks for itself.
The Dog Bites! Prepare for 2017!
All of the above shows that binary options are on the right path! Regulatory authorities are an active part of the industry, not just a bystander or a watchdog that barks a lot and never bites. We’ve named 2016 The Year Of The Crackdown because this year we’ve seen the biggest change in the behaviour of the regulatory bodies. While last year we only saw limited action, in 2016 things have changed considerably, with hefty fines and bad brokers closing down, so we expect to see a much safer 2017. Happy Binary Options!