When the binary options industry was started several years ago, it was slowly gathering speed as a hybrid between financial trading and gaming. The amount of deposits which the companies were attracting was not small, but not too large either. Clients were mainly using the product to test their luck and losing their funds didn’t lead to a disruption of their livelihoods.
This all changed once the firms started aggressively marketing their product as an “investment”. Deposits grew in size and the regulators of binary options firms, namely the Cyprus Securities and Exchange Commission (CySEC), started to look at the practices used by the firms.
Hot sales tactics and deceitful marketing practices took center stage and the industry started consolidating after the harsh regulatory crackdown which was started by the CySEC. The massive deposits that the industry was attracting with many companies using questionable business practices led to much stricter regulations.
Initially firms were forced to reform their trading platforms and reign in their marketing and sales methods. Call centers had to be moved to the EU, which apparently has proven problematic for a number of firms that decided to ditch regulation and find alternative solutions.
Unregulated Binary Options on the Rise
The path that a part of the industry chose was to go back in time and get unregulated again. After Israel cracked down on the industry domestically and coordinated its efforts with the CySEC, firms turned to alternative jurisdictions.
Is a Deeper Stock Market Correction Imminent?Go to article >>
Multiple sources with knowledge of the matter confirmed to Finance Magnates the existence of а number of call centers for binary options brokers in countries such as Serbia, Kosovo, Macedonia and Ukraine.
The companies are using the same hot sales tactics and the same aggressive trading tricks to mislead clients. Handing generous bonuses are once again key and the authorities in the countries which are the targets are helpless to protect retail investors in their jurisdictions.
Call centers based in Eastern European countries outside of the EU are freely soliciting deposits from Australia, EU, Canada and the Far East. Binary options brokers are particularly keen on the Far East and China, where little regulation to protect retail investors exists.
As previous experience shows, there is no more certain way to attract a regulator’s attention than to aggressively target clients in a particular country. The binary options industry may be facing more operating challenges in the coming quarters if such companies continue to grow.
Red Flags for Binary Options Scams
There are several red flags that individuals need to be aware of when they receive a call to invest in binary options. Typically unregulated binary options companies with call centers outside of the EU are contacting their victims without any solicitation on the part of the client. They claim the “investing” in binary options is very easy, that returns are up to 75-90% or similar figures.
The employees in those call centers are likely to present the product as a certain deal and in many cases they would even ask the client to hadn’t over his/her account credentials to a so called “account manager”. This usually leads to a speedy loss of the deposit. Regardless of this step, the safety way to get protected is to check with your local regulator whether binary options trading is suitable for yourself.