CySEC Flexing Its Muscles Towards FX and Binary BrokersBy Adam | Tuesday, February 9th, 2016
The age of relaxed approach to administration and regulations for forex and binary options in the EU is coming to an end.
One of the main financial regulators, CySEC, based in Cyprus, is tightening its regulatory loopholes and punishing local brokers by imposing large fines for variou violations which may include bad handling of complaints, poor investment guidance for their clients, and misleading advertisements.
Cyprus has been seen as a great place and safe haven for FX and binary options brokers and retailers as their relaxed registration process and licensing allowed many companies to establish a strong and regulated presence within the EU. As Cyprus is part of the European Union companies wanting to operate within the region only needed to register with a single European authority.
During the 2015 there was a significant increase in fines, some nearing 1 million Euro, which is a very clear message from the regulator that it will not tolerate any misconduct under its watchful eye. This message continues in 2016 where CySEC already made settlements with binary brokers, Banc De Binary for 350,000 Euro and 24option (Rodeler Limited) for 156,000 Euro.
These are very clear signs that the Cyprus based regulator will continue to investigate and fine companies whenever applicable. The regulator’ main task is to help investors by creating a safe and fair trading environment.
New markets and technologies bring new possibilities and companies that have the necessary financial backing will always have a slight advantage. A regulating body needs to investigate and test all new developments offered by brokers or other financial retailers and find the right balance between protecting individual clients and enforcing good business practices.
CySEC has been known throughout the industry as the ‘most relaxed’ regulator in the EU but if it keeps fining companies that don’t abide by its procedures, they will have a strong chance of yet becoming a credible and respectable regulator of financial services within the European Union.Published in News & Analysis