Binary Options Fighting Back After A Spate Of Regulator Crackdowns
10th of September 2016
After suffering crackdowns time and again at the hands of various financial watchdogs, binary options brokers think they have had enough of this unfair treatment. With SpotOption in the lead, various brokers have come together to defend their interest and fend off future attacks on their operations.
A few days ago, after months of work behind the scenes, SpotOption held a formal meeting with other regulated brokers in Cyprus. The group, consisting of Cyprus-regulated organizations, has had its operations curtailed again and again within the European region despite being in a position to benefit from a passporting agreement devised by its members.
The last straw seems to have been the latest actions by the French, the Israeli, and the Belgian authorities. France has been seeking a ban on all form of digital advertising for binary options companies. Israel and Belgium took things a lot further by completely banning binary options in their territories.
If this trend holds up, the firms are afraid that the protection they expected to enjoy from the passporting agreement might be nullified. Of particular concern to the firms forming this lobby is that the firms being targeted are those that have gone to the trouble of meeting regulatory requirements and getting themselves licensed to offer their services within the region.
While this obviously harms their bottom line and puts their future in uncertainty, it also makes things worse for their citizens as they will be forced to seek the services of unregulated binary options brokers who don’t have to answer to anyone.
The companies believe that part of the reason the regulators are so hostile to them is that they don’t yet have a firm grasp of what the industry entails. Therefore, if the lobbying efforts are to work in their favor, the regulators might rethink their legal stands on the industry based on a better understanding of what binary options involve.
Another major concern for these firms is that other countries within Europe, where a CySEC license is supposed to grant them regulatory authority, might ape the moves taken by Israel and Belgium and ban binary options trading altogether.
Many of these regulators still see binary options as a form of gambling, rather than a financial product. The binary options brokers have been able to win this ideological fight in some jurisdictions. For instance, in Denmark, it was ruled that binary options trading is different from gambling.
Japan and US have also formally recognized binary options as financial instruments and gone on to regulate them as such. The UK also, another major global financial center, sees binary options as financial trading after considering regulating them using gambling laws.
It is the wish of these companies that other regulators understand them well enough to see binary options as financial instruments and give them the freedom to run their affairs without constant interference.
To these firms, the current trend indicates a gross misunderstanding of what they do and stand for. The problem is believed by some players to have emanated from the fact that the industry grew at a very accelerated pace. This failed to give regulators ample time to understand it properly; which in turn resulted in defensive legal moves that have become the bane of regulated binary options brands.
SpotOption is a leading binary options technology developer, accounting for 50% or all binary options platforms. With the lobbying efforts, the company and others within the lobby group expect regulators to see them in more favorable light and grant them the legal freedom that goes it.