Over the last two years, the number of participants in the binary options business has increased dramatically, especially since the decision by CySEC to provide regulatory supervision to this method of trading and deem it an OTC financial instrument.
With the four major platform providers keen to move the game on technologically, there are a number of brands vying for supremacy in what is fast becoming a competitive market.
In this week’s Executive Interview, Forex Magnates discusses the current issues on the minds of those at the customer-facing end of the industry, the brands themselves.
Rob Payne, CEO of Trading247 elaborates on the industry from his perspective.
Please tell us a bit about yourself, elaborate on your professional background and what led you to found Trading247.
I have built a number of startup ventures and worked in corporate finance with 15 years of international venture capital experience.
I love the dynamic of building a business from scratch – realizing a vision with a team of passionate partners, the feeling when overcoming obstacles and the opportunity to building a leading edge company.
I am fascinated by emerging trends, hence my foray into Binary Options and have an extensive network that enables me to find the best people to work with, wherever they are, globally. I’ve had extensive experience in North America, Europe, Asia, Australia, and now Israel.
When you founded Trading247, what did you seek to achieve initially and how did you go about it?
Initially, my intention was to create a Global Online Brokerage, accessible to international retail clients.
When I discovered the simplicity of Binary Options, I immediately understood why this emerging product captured attention and was experiencing explosive growth.
Bluntly, it is the simplest way to trade the market! We wanted to offer this across all international markets, on one platform for everyone.
I then connected with the Leon Okun of platform provider SpotOption. We met in New York and discussed our concept and strategy. How we could build a global brand that’s simplifies 24/7 trading of Binary Options across all major international markets – North America, Europe, Asia Pacific and Australia – with an efficient client service center to respond to all client queries immediately.
We established a customer support centre in Sydney, Australia and registered with the only licensing regulator for Binary Options – CYSEC.
What does Trading247 bring to the marketplace, which is different to that of the existing Cyprus based brands?
We are strategic partners with our platform provider, which is SpotOption, and we are regulated by the licensing requirements of CYSEC and are one of only a handful that has been awarded its Binary Options License.
While focused on servicing clients internationally, we have established our initial customer support base in Australia – a great multi-cultural country with fantastic service-oriented people.
Our range of tradable products is extensive and apart from your typical exchanges and commodities, we have also included the Australian and SE Asian Regions.
Trading247 currently has the world’s largest selection of Binary Options and will continue to expand this. We are now offering Chinese Binary Options assets.
Subsequent to the CFTC’s warning to US residents not to trade in off-exchange binary options, does Trading247 intend to offer a US-compliant platform via NADEX? If so, how will you approach the US market, and will you proceed with the NADEX solution or look to a different method?
Trading247 does not currently market to US residents, nor do we accept them as clients. Trading247 is waiting until such time that regulation permits this.
Japan is clearly an important Binary Options market. Being based in Australia means close proximity to the Asia Pacific region. Does Japan feature highly on Trading247’s agenda, even in the light of the new regulatory structure? Do you view the regulatory changes positively?
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Regulatory changes are absolutely positive. It establishes trust and customer confidence.
As a company we work with all regulatory requirements as they emerge.
Japan is very important to us. Trading247’s website is available in Japanese and we feature a number of Japanese Binary Options Assets. We also service emerging markets in the Asian region.
In terms of business model, which is more favorable: To allow the platform provider to take all of the risk management on board and leave the binary brand to perform the task of a sales team purely going for volume and client deposits, or to take a platform only and then control the risk model in-house rather than having it dictated by the platform provider?
As previously mentioned, SpotOption is our partner and we have aligned interests. They have an experienced and capable risk team, and we liaise with them regularly. Hence at this stage it is convenient as well as appropriate for us to utilize their capability.
If the former, how do you protect your interest if they do not get their risk management right and there is not enough percentage to cover the platform costs, or if there is a conflict of business interest?
We have our internal analyst who constantly exports and reviews data from the platform, ensuring that we are sufficiently capitalized to cover all costs.
In addition, as part of the CYSEC licensing requirements, we have set aside a significant reserve.
Since CYSEC regulated binary options as a financial product, Japan has gone even further in establishing rules as a financial product, and the US requires it to be via an exchange. Do you think that nowadays binary options is becoming viewed as a financial product compared to a gaming product?
While I understand how Binary Options can be viewed as a gaming product, so can currency trading, options trading and share trading.
We have always viewed Binary Options as a financial product. Trading247’s philosophy is that Binary Options are the simplest way to trade on the market, and this is core to our company’s success.
As payouts are getting toward 95% industry-wide, and likely will be all around that figure shortly, how do you ensure there is enough careful risk management to ensure that this is still profitable?
Our statisticians will have to come up with the solution to that one! However like in any business, competition will drive lower costs for the clients as long as this can be met with efficiency savings in providing the service. Simply, if the industry moves to 95% across all products, that will be because efficiency savings will allow for it.
What do you consider to be the best method of client acquisition?Binary options is a different business to FX, insofar as that usually after a trader has blown his money twice, he doesn’t reinvest. This means concentrating on acquisition, which is becoming expensive. If for example the total deposit of a client is $700 and the acquisition cost goes up to $500 (today its around $250) then it’s a loss. How do you counteract this, and increase the lifetime value of a trader?
Trading247 works closely with specialized marketing agencies such as Seperia in Israel, as well as a number of affiliates, to ensure we are acquiring the suitable clients.
The trust of our clients is essential in ensuring a positive lifetime value. Trading247’s motto “We know what Traders want!” comes from having management with extensive trading experience and backgrounds in all markets.
Exceptional client service, instant deposits, immediate action on withdrawals, providing our customers with the tools and support they need to execute trades all play their part.
Our platform is available on a variety of PC and smart phone devices for ease of use and on-the-go access.
Trading247 has recently introduced Binary Options trading signals provided by Algoalerts.com, which allows our customers to access signals every hour, 24hrs a day, 7 days a week. Trading247 also provides daily market reports, the Trading247 Blog, videos and our social community updates.
All these factors assist Trading247’s customers and are important to extend the overall customer lifespan.
What is the future for the binary industry and Trading247’s plans for the rest of the year?
The Binary Options Industry is still in its maturing phase. The Industry is evolving daily, both from a technology standpoint and a regulatory standpoint.
The Binary Options companies that can evolve and execute in this constantly dynamic space will ultimately be the most successful.
Trading247 continues to expand its reach internationally and is always developing its strategic partnerships and affiliations.
Being a significant offering in the Binary Options space, we are constantly approached by other businesses with new and innovate ways to both execute and market.