Regulators and lawmakers are targeting scammy, aggressive and fraudulent call centers but are they throwing the baby out with the bath water?
Call Centers And Marketing Practices Come Under Fire
Binary options will long be known as the red headed step-child of the investment community. A blend of slot-machine style action, technical analysis and day trading there are reasons to criticize the industry. Regardless, there are signs the industry is maturing and that it will be around in some form or another for many years to come. Regulators are stepping up and holding the industry accountable while at the same time legit brokers are banding together in order to differentiate themselves from the run-of-the-mill scam.
New Regulators, New Focus And Industry Groups Making Headlines
Russia is the latest regulator to get into the mix. In this case it is the central bank itself that is regulating and issuing licenses, although what it takes to get a license is unclear. Until now the only governing body in the country was a voluntary organization called CRFIN, later renamed to the National Association Of Forex Dealers. They’ve issued a license to VTB24, a forex broker, after only a few months but have yet to issue one to binary options operator Rodeler Limited which has been waiting for nearly a year. The bank has been selective in the past, choosing to bypass several well-known brokers in favor of some other more questionable ones.
Australia’s ASIC, with the power of new government funding, is undertaking a 4 year plan to inspect, correct and direct the financial industry, including binary options. They look to reform the industry from the top down and bottom up with eye at stopping misconduct at the root. The plan includes 7 prongs and will take a hard look at the highly leverage forex, CFD and binary options products. Specifically, the plan will go after sales and advice practices along with marketing, call-centers and their affiliate networks.
Cyprus has recognized the work of CySEC Chairwoman Demetra Kalogeru by reappointing her to another 5 year term. The next term begins at the end of this year and will run until 2021. Kalogeru was recognized for her leadership through changes she effected, changes which have led Cyprus to become the hub of retail trading that it is today. Her plans include getting even tougher on the brokers with more, bigger fines and accountability as well as bringing all the call-center activity to Cyprus for monitoring and regulating.
The Netherlands, following in the footsteps of France, is proposing to ban all binary options advertising in an effort to protect the citizenry. Their target, the very call-centers and marketing practices that CySEC Chair Kalogeru wants to take control of. The downside is that the ban would be a blanket prohibition on marketing leveraged retail investment products such as forex, CFD’s and binary options. The problem lawmakers face is how to implement the ban since trading these products is in fact legal.
Through it all the legit brokers and technology providers stand tough but have begun to band together in a show of solidarity. Leaprate reported in an exclusive story that leading forex and binary options brokers and platform providers had already held preliminary meetings in order to discuss mission statements, purpose and agenda. One of the most important themes to come out of the meeting was making sure that regulators, lawmakers and the public knew the difference between regulated brokers and unregulated ones. The group, to be known as the EUROPEAN Brokers Association or EUROBA, is going to focus on regulated brokers and platform providers operating and/or supporting unregulated brands, call-center practices and marketing channel practices.
The Message Is Clear, Unregulated Brokers Watch Out
The message is clear, unregulated unlicensed scam and fraudulent brokers need to watch out and this means you, master of the hard sell. You will no longer be able to operate under the radar, with impunity. The regulators and lawmakers are going after the binary options industry in general because of scams but most importantly because of fraudulent, aggressive marketing practices. What you, and we traders, need to remember is that the legit operators aren’t going to go out of business without a fight and they’ve proved that by forming EUROBA. They have just become your worst enemy and will likely come after you harder than a regulator and ask for harsher punishments.