As traders or potential traders before doing anything we must realize that there is risks involved. Especially in high frequency trading such as binary options. There are so many factors that effect the financial markets. But the irony is that, its the same volatility that traders use in order to make profitable trades.
Now as in this industry of online financial investing some may think there is no regulation over the binary options market. Within South Africa or globally for that matter. But that is not true. As written in other posts, there are quite a few regulatory bodies who monitors the financial markets all over the world. Some examples of these are Cysec or the South African FSB Financial Services Board. The regulation authorities main aim is to monitor and oversee the operation and business of binary options brokers. To ensure they are in accordance with rules laid out. This allows South African binary options traders to have a safe and fair experience.
So What’s CySec?
CySec is the Cyprus Securities and Exchange Commission. This authority basically is responsible for setting the standards and rules for binary options brokers to adhere too. Thus protecting investors from malpractice and scams that are so rife in the financial markets these days. The main goal of CySec is protecting the people and setting a fair and reliable environment for people to trade.
CySec is making a positive impact on the binary options trading market in the past years. Successful improvements and implementations of further better security features to ensure you are safe. Furthermore they have been clamping down hard on brokers that are not in accordance recently issuing fines to brokers. This is a good thing for us traders because Brokers make the necessary changes that to ensure they don’t get fined again. Making it all the more safer and fair. After been fined brokers usually pull up their socks and are very compliant to the guidelines set out after.
OptionRally Broker Fined €138000 by CySec
So I’m sure most of you traders have come across or heard about this broker. I have traded with them the first broker i ever signed up with in fact. Horrible experience, left as fast as I could. Anyway CySec regulation body has fined OptionRally binary options broker on the 5th of September 2016 for non compliance of the following legislation:
1. The Investment Services and Activities and Regulated Markets Law of 2007, as amended from time to time (‘the Law’).
2. The Directive DI 144-2007-01 of 2012 of the Securities and Exchange Commission for the Authorization and Operating Conditions of CIFs (‘Directive 1’).
3. The Directive DI 144-2007-02 of 2012 of the Securities and Exchange Commission for the professional competence of Investment Firms and the natural persons employed by them (‘Directive 2’).
- The Cypriot financial regulator has issued a fine of €3,000 for non-compliance with Section 28(1) of the law, as OptionRally failed to establish adequate policies and procedures to ensure the compliance of its marketing material with the regulatory obligations. This included the failure to maintain an internal operation manual or orderly records of the information related to the assessment of its marketing materials.
- The second fine of €20,000 was imposed based on the company’s violation of Section 18(2)(d) of the Law and paragraph 16(3) of Directive 1, which means that OptionRally did not take adequate measures to avoid any unjustified aggravation of the operational risk when outsourcing activities or operational functions. Specifically, the company did not supervise the carrying out of the outsourced activity of preparing the marketing material.
- Furthermore, OptionRally incurred a fine of €30,000. Cause it failed to act fairly in relation to the bonus terms and conditions offered to its clients and the practices applied to this respect.
- The binary options broker was also fined €40,000 for not asking clients to provide the necessary information regarding their knowledge and experience. To assess whether the offered investment service or financial instrument is appropriate for them.
- In addition, administrative penalties included €30,000 for misleading information on its marketing material. Through its website or the call centers to which it had outsourced the customer service.
- CySEC explained that an additional fine of €15,000 was imposed for non-compliance with Section 36(1)(b) of the Law. Information provided on its website was not appropriate or sufficient. Not allowing clients to reasonably understand the nature and risks of the investment service the company offers.