CySec still not planning on regulating binary options

Binary Options regulation is a very hot topic in the binary/forex circles right now. The fact is that while not illegal in Europe it’s frowned upon if excessively marketed. Several binary option brokers are trying to get regulated in Europe however there’s no proper regulatory framework for that and it would take a while for […]

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Binary Options regulation is a very hot topic in the binary/forex circles right now. The fact is that while not illegal in Europe it’s frowned upon if excessively marketed. Several binary option brokers are trying to get regulated in Europe however there’s no proper regulatory framework for that and it would take a while for it to appear. CySec being the most popular forex regulator is constantly being asked whether it can or will regulate binary options (especially interested in this are the registration firms looking to help more clients get regulated). CySec already announced on its website a while back that for now it won’t deal with binary options and now it seems under heavy pressure it issued the same announcement in more formal way:

The announcement says that due to the fact that there are a lot of publications in various media channels concerning the regulation of binary options by CySec, CySec wish to clarify that binary options are not regulated by CySec and that CySec is in contact with other European regulatory bodies so as to implement the best possible practical solution for the benefit of the investors. CySec will not accept pressure from businessmen so as to take a quick decision which might include risks.

The previous official opinion of CySec which is published in CySec’s website, in the FAQ section:

Question: Are binary options regulated by CySEC?

Answer: CySEC’s current position is that binary options do not fall within the definition of financial instruments under the IFLaw 144(I)/2007 and are therefore not subject to CySEC regulation

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8 Comments

  1. Jude Bahnan

    Come to the UK – FSA will happily regulate binary options!

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  2. Stefano

    Honestly it is a good thing for Cyprus and for Cysec as a regulator to take some time or even to avoid regulating binary options. Having binary options regulated there, although I know that there were some consulting companies pushing for that regulation, may create credibility problems and that’s not what Cyprus and CySec want imho.

    And ps: I have never been a fan of binary options…they are more similar to gambling than investing.

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  3. Stefano

    😀 I’m not that pessimistics on cypriot banks, I think the worst is over for them and except for the greek bonds writedowns, they showed relatively good results (BoC and Marfin)…and I think Cyprus is well positioned for future growth and it would be a pity to ruin its importance as a “little” financial center with binary options.

    Basically, Cyprus in my opinion doesn’t need that type of industry. It will just create problems (credibility problems, regulatory problems etc).

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  4. stefan

    binary options are structurally no different than any other over-the-counter product/instrument, so it’s difficult to see how *only* they can be exempted or carved out from the current permissions european regulatory regimes offer providers, and which are fairly wide in scope.

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  5. stefan

    @michael, you’re absolutely right that binaries are all structured and priced differently by the various providers, but so are cfd’s to a great extent. the difference in structure of the same sort of products is the hallmark of otc… under FSA regulations (i don’t have direct experience with CySec, but i’ve been a founder of an FSA regulated business in the past) “Options” are in fact listed as one of the “Specified Investments” they regulate: see item 83, “Options” at http://www.legislation.gov.uk/uksi/2001/544/contents/made

    the point i wanted to make is that it would seem to me that unless the FSA specifically excludes “binary options” from their definition of an “option”, they would automatically fall under it by default – this is my interpretation of the document in any case and i’d be interested to hear alternate views.

    by contrast, providers of “binary bets” in the UK (specifically IG Index) are licensed and regulated by the UK Gambling Commission.

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  6. Michael Greenberg

    do they? i don’t think so, they’ll require you to get regulated as forex broker first

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  7. Michael Greenberg

    half of cyprus banks are about to be shut down, you think BO will harm their credibility? :)

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  8. Michael Greenberg

    they are completely different, each provider has its own options and they are structured/priced completely differently. in spot fx eur/usd is the same asset across all providers worldwide, in binary options eur/usd can be touch or up and down or any other type of option, for different time frame and with different pricing completely – so not sure how they can really regulated them

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