Nadex (North American Derivatives Exchange) has issued a warning against Daily Options, an online brokerage operating at www.dailyoptions.org.
The warning from Nadex comes after the exchange learned that Daily Options, which offers the service of logging into binary trading platforms selected by its clients and successfully managing and trading on their behalf, has been encouraging Nadex members to provide their usernames and passwords to trading supervisor Franklin Cove, in order for Daily Options to trade the Nadex account on the member’s behalf.
CFTC and SEC Registration
Nadex is an important US derivatives exchange which most US investors use to trade binary options. In the United States, all binary options have to be traded on a regulated exchange since the regulator banned OTC brokers from the continent.
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However, an increasing number of US binary options traders are reported to have been using the services of unregulated brokers. Nadex has reminded investors that it will not assume any responsibility regarding the transactions of these services and has made it clear to investors that financial services firms may require registration with either the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC).
Not Affiliated with Daily Options
Nadex has stated that it is not affiliated in any way with Daily Options or Franklin Cove. The exchange has drawn attention to its membership agreement which states that members may not give control over their account to any other person or entity, nor can they control the account of any other member. In this respect, members are required to maintain the confidentiality of their access materials and prevent the unauthorized use of these at all times.
Nadex rules also state that no individual trading member or entity may trade for a person or entity other than itself. Accordingly, any Nadex member who grants access to their trading account to a third party is in violation of the membership agreement and may be subject to disciplinary action.
In light of today’s warning, Nadex has reminded its members that it is not a brokerage but a registered Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO). As a DCM and DCO it is required by CFTC Regulations to have and enforce rules that protect the markets and its members.