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Are there signs however, that some of those barriers are soon to be removed? I want to explain what is holding binaries back right now — and what might develop during to help move these simple tools, from relative financial obscurity, into the mainstream. Binary options have a poor reputation. The poor reputation has been created by irresponsible marketing and short sighted brokers, looking to take advantage of a new financial innovation — before it gets fully regulated.
This is not a new phenomenon. New financial products are often seized upon by unscrupulous operators and binary options were no different. These funnels are a misleading way to market binary options. Some of the activity was bordering on the criminal. We have managed to help some people who have been on the wrong end of this sort of thing — if you have, get in touch.
Regulation was another issue. Unregulated firms were free to operate, and those firms that were regulated where rarely monitored as they should have been. This area has improved however, in two ways. Firstly, CySec — the regulator covering most firms, began to deliver some serious blows to brokers not adhering to regulations.
They are finally making some sensible demands of the firms under their stewardship and are dishing out meaningful punishments where required. The second improvement comes in the form of better regulation across Europe — other bodies are now stepping up their efforts to get involved.
So what is likely to change and how? Both are mainstream CFD brokers, illustrating the slow acceptance of the financial sector that these instruments are genuine, and popular trading products. Another move forward is in regulation. Again, some brokers now getting involved in binaries, are already regulated by strong European regulators, because they already offer other mainstream products. The more robust regulation brings us on to Brexit.
The update was going to include new rules on short term trading, and also include binary options. Due in early , the rules were delayed to give firms more time to comply.
How does Brexit fit in? At present, they have not shown a great desire to clean up the sector — maybe that will change. This will be another big step towards moving binaries into the financial mainstream. It is worth remembering however, that as I mentioned above — some firms now offering binaries are already regulated by the FCA because of the additional financial products they offer. More products, better pricing, absolute transparency and a focus on the clients are just some of the improvements.
I have seen a demo of these offerings and they are a game changer , plain and simple. The model is based on trading volume, not counter-party risk. That means they want traders trading, and they do not mind if they are profitable — long term. We will of course be listing and reviewing these brands — and the binary options sector will be given a real shake up.
Hopefully, a big enough shake to move them out of the shadows, into the light of the financial mainstream. The future of binary options.
Regulators bear teeth Regulation was another issue. The future of binary options So what is likely to change and how?