IG Group Distances Itself From Binary Options
Major online trading broker IG Group has taken steps in recent days to distance itself from the binary options industry. The London-listed company, which also offers a variety of other trading opportunities including CFDs, has made the decision based on the increasing negative sentiment surrounding binary options, as well as the tightening noose of regulators as they attempt to combat unregulated brokers in the industry.
The company took several steps to create a strong separation, although they did not pull out of the game entirely. Officials announced that though they would not entirely be stopping the service, it would be operating under a different name. This marks yet another high-profile case of companies stepping away from an industry that is increasingly under attack by consumers and regulators alike.
Rebranding and Reshaping
IG Group announced during its most recent earnings call that it would stop offering its “Sprints” binary options services to consumers, before quickly clarifying its position. The company will not offer the service to any new customers, but will still provide it to existing ones. This is one more in a series of steps IG Group has taken to distance itself from the binary options name.
The company has been rethinking and restructuring its offerings as several regulators across Europe tighten their frameworks and force companies to reevaluate the way they do business. IG is looking to establish itself as a more complete investment manager, even receiving a new license in the UK recently. When it comes to binary options, however, the company has taken a few different measures.
The first was to rebrand its binary options offerings as “digital 100s”, purportedly in an effort to distance itself from a name that has been increasingly tarnished. Reports of fraudulent and unregulated binary options providers using aggressive and sometimes predatory tactics to recruit customers and encourage them to spend their money have become all too common.
Even more drastically, the company announced in a letter to all its affiliates that it would no longer pay for leads related to its binary options business. Additionally, the company will also not accept any traffic that accesses their website from pages or sites that have content related to binary options.
The moves are in line with a rapidly changing regulatory environment that has become unfriendly to binary options. While IG Group is not completely extricating itself from the industry, it has recognized that associating with an industry that has been linked with fraudsters could potentially drag on results for its other investment services.
What it Means
While the impact on IG Group’s revenues will not be extensive, it could be a big event down the line for the industry as a whole. Until now, there has been a strong distinction made between regulated firms that work to operate completely above board, and those who function without regulation and have been largely responsible for the abundant negative publicity.
With regulators continuing their clampdown on binary options and other investment products, a move by a major company such as IG Group could lead to others following suit. As watchdogs across Europe continue to close off avenues for regulated brokers, this could create a vacuum that could easily be filled by those companies operating outside of any regulatory frameworks. If unchecked, it could result in serious problems for consumers who would be left vulnerable to businesses who are not beholden to investor interests.
For IG Group, it means that revenue streams will be slightly altered, but in the long run, the company will be able to shake the negative image while maintaining its edge.
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