Warnings: More Brokers Red Flagged by the Authorities
Regulators around the world have ramped up efforts to warn investors about unregulated binary options brokers. The common complaint is unregulated as few concrete details have been released. However, despite the uptick in efforts the result is the same, an confusing mix of warnings that only make sense on a regional level; there is still no international standard and some brokers are still taking every advantage they can.
Regulators Struggle To Stay Ahead Of The Game
An example of how disjointed the binary options regulatory scheme is is the recent warning by the Spanish CNMV against broker Prime FMS. They warn the broker is unlicensed to operate in Spain, but failed to take note the broker had already shut down leaving traders with positive balances high and dry. Prime FMS was also warned by the UK FCA last year for shady dealing and non-compliance.
France’s AMF, the most prolific of those issuing warnings, has updated its list to include 24 new names. The total number of black listed brokers is now 247, an amazing number considering how young the industry is. The major complaint of the list is that the companies are not regulated to operate in France; CySEC regulated brokers are not included on the list but several top non-regulated names are.
The US CFTC has recently joined the bandwagon and created a Red List complete with web site. The list, the name stands for Registration Deficient List, seeks to inform US residents of brokers not regulated to operate in the states. At this time the list is very weak and only includes a dozen names with little information. Since there are only 2 places to get CFTC regulated binary options it may have been better to create a green list since there would only be two entries.
The problems are not limited to western countries. China, Hong Kong and Japan have proven to be rich markets for binary brokerages and have had to enact regulations to curb unlawful operations. Each of these jurisdictions have had to issue warnings against brokerages accepting their traders. The problem is not so much that they are marketing to traders in those regions, it is enough that they accept them. Binary options are indeed regulated in both Hong Kong and Japan, with some differences from western style spot trading. The biggest is that short term like 60 seconds and 120 seconds are not allowed.
Canada Sings Loudest
Canada sings loudest in the chorus of regulators issuing warnings. This may be due to the fact that not only is there a national agency issuing a general warning against unregulated brokers each of the provinces has one doing the same thing. Take for example BrokerageCapital.com. This is a KeyStone based broker operating out of Belize. It has recently received warnings from at least two of Canada’s regulatory bodies for aggressive marketing tactics and non-regulated status.
Canada is also the most specific of the regulators. They are warning specifically for non-regulated companies. Binary options is legal in the country but companies are restricted from the aggressive marketing tactics that target unsuspecting traders and get them to deposit large sums of money before they understand what they are investing in.