CySEC issues new directives focusing on increased transparency
Cyprus financial regulator CySEC has issued some new directives on Binary Options trading, centering on required increasing transparency from binary options brokers.
CySEC has given regulated binary options brokers on the island three months to demonstrate that they are in full compliance with all aspects of the new directives.
The directives, reviewed in more detail below, center on giving binary options traders more information on binary options pricing as well as buyout / exit pricing.
CySEC’s moves come after the binary options sector has come under increased scrutiny by regulators in several jurisdictions worldwide. Cyprus remains one of the few recognized regulators which actively licenses and regulates binary options brokers.
The CySEC directive reads as follows:
The Cyprus Securities and Exchange Commission (‘CySEC’) wishes to inform the CIFs about the following:
A. Legislative framework
1. Chapter C, Part V (Provisions for the protection of investors) of the Investment Services and Activities and Regulated Markets Law of 2009, as in force (‘the Law’) lays down conduct of business obligations when providing services to clients from CIFs.
Β. Compliance with Law – Accepted Practices
2. For compliance purposes with Chapter C , Part V of the Law, CIFs must use trading platforms for reception and execution, or transmission, of orders, which, among others:
i. Provide adequate information to clients about binary options, so that there is full transparency.
ii. Operate in a way that is fair to clients.
3. For the purposes of ensuring compliance with the above provisions, the CySEC indicates in paragraphs 4-11 below, accepted practices applied in binary options trading platforms used by CIFs.
It is noted that these practices are not exhaustive and the CIFs are requested to establish and implement additional arrangements/procedures, having in mind the need for full transparency and protection of clients’ interests.
4. Information on the identification of the underlying asset of the binary option
Providing clients with sufficient information regarding the identification of the underlying asset of the binary option, including the trading venue [e.g. WTI Crude Oil (Dec 15) NYMEX]. This information is fully integrated at a specific section on the trading platform or a relevant link referral to the website of the CIF is available.