The Cypriot regulator issued two small fines to SpotOption Exchange and BDSwiss in December in what seems to be an ongoing effort by the regulator to get its house in order. After a lot of criticism, the Cypriot regulator has ramped up its control mechanisms and started taking action against a number of companies in the industry.
Spotoption Exchange was fined €10,000, while BDSwiss was fined €5,000 with the CySEC announcement not providing any details about the reasoning behind the move.
The Executive Director of SpotOption Exchange Nir Menashe commented on the matter: “The fine refers to a temporary malfunction of the pricing engine of a newly introduced product in May 2014. The company took all necessary actions to rectify the price engine malfunction and to prevent such events from recurring in the future.”
“The CySEC noted positively in its decision the control measures adopted by the company to prevent the recurrence of such events and the fact that the company had never previously been fined,” he elaborated.
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A BDSwiss spokesperson has responded, saying that the reasoning behind the CySEC fine was related to a technical difficulty with one of the firm’s platform providers which affected the execution rates with one of the firm’s clients.
Looking at the function of SpotOption Exchange, it is the company which is making the market for binary options for clients of the company. The fines may well be connected since BDSwiss has been using the solution which is managed by SpotOption Exchange.
From the looks of it, CySEC is going now after complaints of single clients and aiming to ascertain whether the prices which a client received were close to market levels. The approach is not consistent across the board, since the deposits of a number of clients of IronFX have been withheld for months with no specific explanation given by the company in a number of cases.
The move confirms that CySEC is continuing its effort to further scrutinize binary options companies and establish a more solid reputation as a strict financial regulator after pressure from the European Securities Markets Authority (ESMA). Brokers of binary options have been under closer inspection since last year, after a number of complaints from the French Financial Markets Authority have triggered backlash from the European peers of CySEC.