Dutch Regulator and Courts Battle as Binary Options Provider's Licence Restored
by
Adil Siddiqui
In a surprise ruling, binary options broker, Optieclub, is expected to receive authorization to offer financial trading products under Holland's AFM after courts rejected their decision not to regulate the firm.
Dutch binary options broker, OptieClub, will receive authorization as a regulated broker under the country's financial watchdog after Dutch courts rejected the watchdog's plea of refusing to regulate the firm.
A legal fight between the regulator, AFM and Optieclub, and a surprise turn of events have questioned the credibility of financial watchdogs in Europe and their decision making process. The latest decision could result in Holland becoming a new hub for binary options firms looking for sound Regulation in Europe, thus signifiying the diverse nature of financial markets.
Regulator Vs Broker
According to details filed on the government's main website for legal affairs, AFM is to provide sanctuary under its regulator wings within two weeks to the broker. The details state: The judge of the Appeals for business (Tribunal) request refers to a preliminary injunction (from the regulator) the Authority for the Financial Markets (AFM) and OptieClub (translates as Option Club), a new decision in two weeks.”
The case was put forward by the broker in the District Court of Rotterdam and was based on a decision issued by the regulator on the 16th of January, 2015.
A binary options brokers, in its initial decision, the AFM refused to authorise OptieClub with a financial license, deeming the business to be resembling gambling, and thereby requiring a gaming license. The AFM's rationale for their decision was based on them considering binary options with short maturities as a game of chance.
The court note continues to explain the AFM's views on the product which it deems unfit for users: “The AFM considers offering binary options to consumers as conduct that is contrary to what are acceptable standards in society, because such options are not cost-efficient, useful, safe and understandable.”
The AFM's opinion though went against previous MiFid opinion that was first published by ESMA which stated that binary options were in fact a financial product and fall under the governing jurisdiction of financial regulators. That decision has been the foundation of EU regulators to have issued multiple warnings against non-regulated binary options brokers, with France being one of the most aggressive against unlicensed firms marketing in their country.
The case commenced in May 2014 when the AFM refused to issue a license, since then OptieClub has appealed and the matter is being settled in the courts. The last major hearing was on the 16th of January where the courts gave the regulator six weeks to make a decision, which was further appealed by AFM. However, the latest decision by the courts put additional pressure on the watchdog. Their latest decision rejects an appeal from the AFM and gives the regulator two weeks to make a decision, in addition, AFM is to pay legal fees for OptieClub. Defending OptieClub in the case was attortney Bas Jongmans of the Gaming Legal Group, a Netherlands bases law firm assisting Dutch and Malta gaming and Online Trading firms.
Binary Options a Game-Changer
Binary options are one of the fastest growing investment products, although industry professionals are debating whether the product should be classified as financial trading or gambling. A number of retail FX providers have enhanced their offerings to include binary options, including Markets.com and Hantec.
The ongoing developments in the binary options space have resulted in interest into the workings of the product. Recently, authorities in the UK reported that the product was being reviewed with the possibility of the FCA taking the product under their banner. Cyprus was the first European nation to formally authorize the product.
Dutch binary options broker, OptieClub, will receive authorization as a regulated broker under the country's financial watchdog after Dutch courts rejected the watchdog's plea of refusing to regulate the firm.
A legal fight between the regulator, AFM and Optieclub, and a surprise turn of events have questioned the credibility of financial watchdogs in Europe and their decision making process. The latest decision could result in Holland becoming a new hub for binary options firms looking for sound Regulation in Europe, thus signifiying the diverse nature of financial markets.
Regulator Vs Broker
According to details filed on the government's main website for legal affairs, AFM is to provide sanctuary under its regulator wings within two weeks to the broker. The details state: The judge of the Appeals for business (Tribunal) request refers to a preliminary injunction (from the regulator) the Authority for the Financial Markets (AFM) and OptieClub (translates as Option Club), a new decision in two weeks.”
The case was put forward by the broker in the District Court of Rotterdam and was based on a decision issued by the regulator on the 16th of January, 2015.
A binary options brokers, in its initial decision, the AFM refused to authorise OptieClub with a financial license, deeming the business to be resembling gambling, and thereby requiring a gaming license. The AFM's rationale for their decision was based on them considering binary options with short maturities as a game of chance.
The court note continues to explain the AFM's views on the product which it deems unfit for users: “The AFM considers offering binary options to consumers as conduct that is contrary to what are acceptable standards in society, because such options are not cost-efficient, useful, safe and understandable.”
The AFM's opinion though went against previous MiFid opinion that was first published by ESMA which stated that binary options were in fact a financial product and fall under the governing jurisdiction of financial regulators. That decision has been the foundation of EU regulators to have issued multiple warnings against non-regulated binary options brokers, with France being one of the most aggressive against unlicensed firms marketing in their country.
The case commenced in May 2014 when the AFM refused to issue a license, since then OptieClub has appealed and the matter is being settled in the courts. The last major hearing was on the 16th of January where the courts gave the regulator six weeks to make a decision, which was further appealed by AFM. However, the latest decision by the courts put additional pressure on the watchdog. Their latest decision rejects an appeal from the AFM and gives the regulator two weeks to make a decision, in addition, AFM is to pay legal fees for OptieClub. Defending OptieClub in the case was attortney Bas Jongmans of the Gaming Legal Group, a Netherlands bases law firm assisting Dutch and Malta gaming and Online Trading firms.
Binary Options a Game-Changer
Binary options are one of the fastest growing investment products, although industry professionals are debating whether the product should be classified as financial trading or gambling. A number of retail FX providers have enhanced their offerings to include binary options, including Markets.com and Hantec.
The ongoing developments in the binary options space have resulted in interest into the workings of the product. Recently, authorities in the UK reported that the product was being reviewed with the possibility of the FCA taking the product under their banner. Cyprus was the first European nation to formally authorize the product.
US Operator of Binary Option Brands Fined $516K for $10M Scam
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
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Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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