Growing Regulatory Pressure and FXCM's Facelift - Best of the Week

During the passing week, the top news in the global Online Trading industry included the rebranding of FXCM, regulators in Israel and the Netherlands taking action against binary options, Forex and CFDs, Playtech revealing its annual results and the FCA hinting that it may regulate binary options within a year.

Dutch regulator prepares binary options, FX and CFDs advertising ban

On Monday, we reported that the AFM (Financial Markets Authority) is preparing to limit the advertisement of certain financial products that the country’s government deem too risky. The regulator published a communique which effectively starts a period of consultation with the industry and clients of the financial services.

High-leverage products will be limited across the board with binary options, forex and CFDs with over 1:10 leverage being forbidden. The country’s regulator is also enforcing a ban on warrants, cocos (Contingent Convertible bonds), futures and some turbocharged products with leverage higher than 1:10, which have been on the offer by commercial banks.

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FXCM on the move

Tuesday - FXCM, once the biggest retail forex broker in the US but now expelled from that market, renamed itself and introduced changes to its senior management . The forex, CFDs and spread betting provider promoted the European subsidiary’s CEO, Brendan Callan, to Interim CEO. He has been with the firm since 2001 and has successfully been managing the company’s London-based branch since 2010. The embattled former CEO, Drew Niv, will retain an advisory role for the public company, which is to be renamed ‘Global Brokerage Inc’.

Playtech’s bullish 2016

On Thursday we learned that the gaming and online trading giant Playtech has benefited from CFH acquisition. Playtech’s 2016 annual results released last week showed substantial growth. The company’s second half was boosted by the acquisition of CFH for $120 million, which concluded on the 30th of November and added a total of €1.8 million to the company’s revenues.

For the full year 2016, revenues of the financials division increased by over 9 percent to €65.6 million. The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totalled €15.4 million, which is lower than 2015’s €15.9 million by 3 percent. The company has attributed the underperformance in its bottom line to an overall decline in volatility.

Israel to ban marketing binary option abroad, limit FX market

On Thursday we exclusively reported on the dramatic new Israeli law that targets the marketing of binary options abroad and unregulated forex brokers operating in the country. According to the new law, the draft of which was obtained by Finance Magnates hours before its official release, the ISA intends to ban the marketing of binary options by Israeli companies abroad, almost one year after it banned the targeting of Israeli citizens last March.

In addition, foreign exchange brokers with an Israeli license will not be allowed to offer FX or onboard clients of foreign countries if they don’t hold a license in those countries. The penalties for violators of the law include jail time of up to two years.

Will the FCA watch binary options?

On Friday, the UK’s Financial Conduct Authority (FCA) hinted it may take binary options market under its remit by January 2018.

According to new data released by the regulator, binary options made up 17 percent of the 106,800 enquiries to the FCA’s consumer contact centre between December 2015 through November 2016. The watchdog attributes the increasing popularity of binary options to the current low interest rate environment.

However, the FCA added that it has concerns that UK consumers are being increasingly targeted by fraudsters who offer opportunities to invest in binary options. Many such illegitimate binary options firms do not appear to be regulated by any agency, either in the UK or abroad.