The Cyprus Securities and Exchange Commission (CySEC) is the main watchdog of the binary options industry and the reason is that most brokerages conduct their business out of Cyprus due to its loose financial laws. Recently the CySEC has outlined that the industry needs major changes but especially some companies, which are relying on aggressive sales tactics to promote their business. Next, we are going to discuss some of the main changes proposed by the CySEC.
CySEC Setting Clear Limits
Too many times, we contact a brokerage’s support staff to inquire about something and all we get in return is a cheap sales pitch. Our questions are answered with another question or with advertising for a bonus. The Cypriot regulator has recently outlined clear rules regarding the information the support staff can provide:
- They are allowed to provide information about the brokerage and its services, proposed investment strategies, including risk warnings and proper guidance.
- They are allowed to discuss the risks of trading and of particular investment strategies, costs and additional charges.
- They can answer technical questions regarding the trading platform and the brokerage’s website
- They can answer questions about the account opening process.
It’s a step in the right direction but a bonus, a promotion or risk-free trades are still a service offered by the brokerage so I don’t see this stopping the support staff from trying to “sell” us a bonus or other promotion. Also, I don’t feel too comfortable about them proposing us investment strategies and talking about their risks – we’ve heard them many times talking about low risk when in fact the risk was high.
According to CySEC’s guidelines, Cypriot Investment Firms (CIFs) need to instruct their staff to avoid offering investment advice regarding financial trading assets. Also, regulated CIFs will not be allowed to use high pressure tactics and staff will be forbidden to phone call the client frequently. Soliciting investments or advising what trades to make will also be forbidden and the brokerage must make sure these guidelines are followed. Hopefully all this will put an end to the endless phone calls and aggressive sales pitches; there’s enough pressure from the market and we don’t need someone constantly bugging us to deposit more or to place some trade.
Support Representatives And Made-Up Names
Steve Green, John White, John Doe – all these made-up names will soon disappear because CySEC will make it mandatory to use the real names of support staff members. They will also have to go through a certification progress and brokerages will have to make sure their staff maintain a high degree of expertise and knowledge. Furthermore, the representatives of the brokerage will be liable for their conduct and can be sanctioned if they don’t obey the rules imposed by the regulatory framework.
Additional guidelines suggest that brokerages should not outsource their client support services, but this is not banned completely. However, if they want to outsource to third parties, the capital requirements for the company will increase by at least $1,000,000; in other words, the CySEC doesn’t forbid outsourcing but it makes it very expensive for the brokerage.
With all these new guidelines, maybe the endless phone calls will finally stop and maybe speaking to a support representative will feel less like a battle to obtain information. Keep in mind that all of the above only applies to CySEC regulated brokerages but once implemented, we will probably see a much more professional environment. #makebinariesgreat