The Binary Options industry has a lot of problems right now. Fewer than a couple of years ago – and that’s great – but still has them. One of the biggest and most annoying is that you cannot have a normal conversation with a broker’s representative without him or her asking you to open an account or to invest more money if you already have one. Recently, Demetra Kalogerou, head of the Cyprus Securities and Exchange Commission (CySEC) addressed this issue in an interview.
During 2016, binary options brokerages have received a lot of heat form regulators around the globe and we’ve even seen a ban of this activity, coming from the Israeli Security Authority (ISA). This regulatory body decided in March 2016 to disapprove binary options trading for companies that wish to be regulated in Israel. In other words, no company regulated by the ISA is allowed to offer binary options trading. It’s a big decision and a radical one but similar developments are taking place in Canada and France where regulators are issuing warnings and imposing new rules, making the binary options business more difficult for many brokerages.
Most of the clients’ complaints are about the call-centers run by brokers, which are considered deceiving regarding the risks involved and too aggressive in their sales tactics. In other words: they quickly move past the “risk” part (or don’t even mention it) and then focus on how much money you are going to make. Then they start calling you over and over again, spamming you with “just for you” offers, bonuses and risk-free trades.
These issues were discussed with Demetra Kalogerou, the Chairwoman of the CySEC. She mentioned that it’s rather normal for investment firms (brokerages) to outsource marketing and technology. While the CySEC has no problem with outsourcing the technology part, she said that the marketing is creating problems, continuing to mention “some of these call centers may employ aggressive marketing and thus risk misleading or pressuring the investors”.
Most of the call-centers are located in EU member states or in third countries, not in Cyprus, thus they cannot be properly monitored and this may determine the CySEC to require brokerages to operate these call-centers from within their offices in Cyprus or “or only through a branch, tied agent or regulated entity based in another jurisdiction”. CIFs (Cypriot Investment Firm) are required to have in place internal monitoring mechanisms for their call-centers and all sales people must be well trained and must pass CySEC’s exams. I am curious how those exams will be conducted but hopefully they will give us more knowledgeable sales representatives and will limit the amount of pressure put on clients.
The Future is Bright
With the CySEC addressing one of the most annoying problems of the binary options industry, I believe the trading environment will change for the better. As clients, we all hate the endless phone calls and the pressure to invest. They promise the world before we deposit and when they’ve got us hooked they don’t answer our calls anymore. When we want to withdraw, they stop all discussions and go dark until they want us to deposit some more. Hopefully this will all stop if the CySEC finally starts to put their foot in the door but lately they seem more determined than ever so there’s hope on the horizon.