CySEC Disapproves Aggressive Marketing; Calls for more Binary Options Regulations
Binary options are a type of financial investment where there is either a hefty profit or no profit at all. These are a type of high risk investment that can offer great rewards but their high risk nature leads to a lot of mistrustful dealings by brokers and their marketing agencies. Recently, the Cyprus Securities and Exchange Commission (CySEC) has called for stricter binary options regulations as the CySEC chairwoman, Demetra Kalogerou, has spoken candidly against the aggressive marketing techniques used by brokers to sell binary options.
There have always been a large number of complaints about how brokers are marketing binary options. Most brokers are outsourcing their marketing to call-centers located away from their actual center of operations. These call centers are located in smaller European countries or in third world countries which has led to a rise in unorthodox and aggressive marketing methods. These call centers are in the habit of calling investors up continuously and pressuring them into making an investment. They will keep hitting the investors back with special offers, bonuses, and risk-free investments to get them to invest. Once an investor has put some money in, they will stop taking their calls and even disappear if an investor asks for a withdrawal.
To top it off, the sales pitches also leave a lot to be desired. The chairwoman also mentioned her distaste with the aggressive marketing campaigns by these call centers that are misleading their investors. A lot of these call centers only go over the risks very quickly and try not to put too much emphasis on it. Some marketers don’t mention the risks at all and instead focus on selling the investors on the idea that they will be making huge profits.
This type of marketing has already led to a number of strict binary options regulations in various regions including most notably in Israel where the Israeli Security Authority (ISA) actually banned binary options trading in March 2016. Companies that are regulated by the ISA are no longer able to provide binary options to their investors, leading to a complete shutdown of the practice in the region. While this is the most extreme example, other countries like Canada and France have also started making binary options trading harder by issuing warnings and imposing new binary options regulations.
CySEC is pondering a number of new regulations for binary options to try and bring the call centers on to the same page. This includes the option to require brokerages to operate their marketing departments and call centers from within their local offices or through a branch, local entity, or tied agent.
All Cypriot Investment Firms will also be required to have internal monitoring mechanisms in place for their sales teams and the teams will also have to be fully trained and must pass exams given by CySEC.
As an investor, it’s a great time for the binary options sector because finally investors are getting more protection and will be able to make their investments with peace of mind.