France Commences Enforcement of New Advertisement Restrictions

The French Autorite des Marches Financiers (AMF) announced this week that it has started enforcing the new Sapin II regulations, which call for a ban on electronic advertisement and marketing by companies that offer binary options and Contracts-for-Difference (CFDs). The law, which was approved early in January, enacts a broad range of changes to the country’s financial systems, also includes strong language regarding the use of electronic media for marketing by binary options, forex and CFD brokers.

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According to reports, the AMF has already started actively enforcing the regulations, and has already sent several requests to different websites and brokers to take down existing marketing campaigns. Additionally, the AMF has also created new regulations and requirements for brokers who wish to operate in the country. The action is a further sign that binary options’ image problem has deteriorated significantly, as regulators across the European Union ratchet up the fight against the industry.

AMF Locks Down Electronic Marketing

The AMF took its first official steps to curb the electronic marketing of binary options and forex within French borders this week as it began enforcement of the newly passed Sapin II guidelines, which create new regulations for providing financial services in the country. The new laws are aimed at protecting consumers from an industry that regulators in France and across Europe have come to view as dangerous and many times predatory.

Over the past week, the AMF has begun sending requests to brokers and affiliate marketers instructing them to remove all electronic advertising materials from their sites and any online locations that are driving French traffic to their sites. While the specifics are still being actively worked out, Sapin II regulations include any binary options or forex brokers. It is important to note, however, that while advertisements and marketing are banned, these companies can continue to sell their services to traders in the country—assuming they are properly regulated.

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The new regulations also nail down who is permitted to advertise electronically. For now, both binary options and forex brokers are completely banned from any electronic marketing, while CFD providers are still able to do so, provided they maintain compliance with new regulations.

In addition to the ban, the new law also outlines some new restrictions on brokers to protect customers. For one, the AMF will require all brokers who are offering binary options and CFDs to include guaranteed stop loss positions for customers, as well as negative balance protections to ensure that customers cannot inadvertently lose massive sums of money. Moreover, clients will be required to introduce a stop-loss position before engaging in any trade, and must be unable to change the position once a trade has been initiated.

Sunset for Binary Options in France?

Although the new law does not outright ban binary options from the country, it does raise some serious questions for the industry in France. For one, binary options might be forced out simply by necessity. While many customers seek out binary options, the industry relies on marketing and advertising to direct traffic to their sites, and especially electronic media such as browser ads, e-mail campaigns, and other similar strategies. Without it, the long-term profitability issue might drive brokers to find friendlier shores and leave the country without a presence of regulated brokers.

Furthermore, the new policies signify what is increasingly becoming the new status quo in the region. Several other European nations have already started drafting or even implementing similar laws. With the tide rapidly turning against the industry, observers can only wonder if the sun has set on binary options across Europe.

TechFinancials’ Stock Collapses on 24Option Departure

Online binary options platform provider TechFinancials saw its shares crash after an announcement during its results trading update that it lost one of its major white label partners. Executives for TechFinancials noted that the company had delayed paying out dividends after it became official that 24Option, one of the company’s biggest clients, has decided to stop using TechFinancials’ platform in favor of its own.

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The result was a more than -30.00% drop in share prices as investors reacted in a panic. The company did some damage control, noting that first quarter results would be unharmed, but did acknowledge that the outlook for the remainder of the year would be challenging. Nevertheless, TechFinancials has made some moves to mitigate the damage, including diversifying its offers and onboarding several other white label partners.

Bad News Leads to Bad Day on Trading Floor

Despite an overall positive update, TechFinancials saw its London-listed shares spiral down after revealing that one of its major clients had chosen to stop using the company’s platform. Richfield Capital, which operates the website www.24option.com, has elected to take their trading platform and related services in-house, leaving TechFinancials to fill a hole left by what was one of their largest and most important customers.

The change comes as 24Option seeks to gain more control of its services, leading to a split with TechFinancials. The platform provider noted that its 2016 earnings would not be affected by the change. The company is expected to report revenues of $21.0 million, while EBITDA is set to tally in at $2.8 million. Nevertheless, TechFinancials warned that the damage would likely become evident in the company’s earnings for 2017.

The company did note that it had foreseen the possibility of 24Option defecting, and had begun to work to mitigate the potential loss of what in 2015 accounted for roughly 30.00% of the company’s platform revenues, or 15.00% of total revenues. TechFinancials has been working to diversify their portfolio by onboarding new white label clients, as well as expanding into new regions. Moreover, the company even launched their own online binary options brokerage, OptionFair. Regardless, the company will be hard pressed to fully replace the losses from 24Option’s departure over the short-term.

What it Means

The loss of its major client means that TechFinancials’ will be forced to shift its strategy, and will absorb a heavy hit over the near-to-medium term. The company already announced that it will halt its dividend payout pending a deeper review of the impact of the loss in revenues. While first quarter earnings are unlikely to be hurt—the departure will only become official on April 1st—full year revenues will likely bear out the full hit to TechFinancials’ bottom line.

Moreover, the news proved catastrophic for the company’s London-listed shares. Following the news, TechFinancials stocks nosedived by a whopping 3-0.00% on Tuesday. The drop led to two consecutive 5-minute price monitoring extension periods, and though shares have recovered somewhat since then, they remain far below previous levels.

In the long-term, TechFinancials is likely to largely mitigate the damage thanks to its growing expansion and signing of new clients. However, the company could be facing a growing trend as more companies look to take their trading platform services in-house to avoid white-label deals that force them to share revenues with providers such as TechFinancials.

The company could also face problems over the medium-term as the ongoing clamp down on the binary options industry across Europe and other regions continues to force companies to drastically reevaluate their business models and in some cases even close their doors.

Canadian Regulators Warn of Firms Using Kevin O’Leary’s likeness

Canada’s Ontario Securities Commission, one of the largest regulators in the country, has issued a warning to consumers regarding several websites that have used businessman and TV personality Kevin O’Leary’s likeness to promote their products. These binary options brokers have been operating in the country without regulation, and have been using O’Leary as a way to make themselves appear more legitimate, according to the watchdog.

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The perpetrators include four websites, two of which were still using O’Leary’s picture when researched. These companies are accused of selling “get-rich-quick” schemes that many times are simply covers for fraudsters. While Canada does not directly ban the industry from operating in the country, the OSC has made it clear that there are no binary options brokers or providers currently authorized to offer their services in Canada.

O’Leary Denies Involvement in Binary Options

Ontario’s top financial regulator has warned investors of at least four binary options brokers that have been using Kevin O’Leary’s likeness to sell what the watchdog describes as get-rich schemes. The Dragon’s Den and Shark Tank star denied involvement in any of the sites investigated by the OSC, as well as any participation in binary options at all. The Conservative Party leadership hopeful is one of Canada’s most well-known businessmen and personalities.

The four companies—Millionaire(s) Blueprint, Play it On Point, Eurostreet Money, and Boss Capital—are operating in Canada without regulation, and two of them continue to use O’Leary’s likeness despite the warning. The sites include everything from pictures of O’Leary with quotes talking about his investment acumen and strategies. Some go further, and even include articles alleging that Mr. O’Leary’s “Secret to Success” is binary options, going as far as quoting “associates” that “corroborate” the alleged strategy.

The worst part is that the OSC has previously issued warnings against at least one of the brokers mentioned. In October, the British Columbia Securities Commission—in an unrelated case—issued a warning against Millionaires Blueprint, advising that the company is not registered to trade, advise on, or provide any contracts or securities in British Columbia.

While binary options are not explicitly banned in Canada, regulators across the country have taken a hardline stance against the industry, with no brokers currently authorized to offer any investment or trading services. While Canada’s financial regulation follows a more decentralized model, the issue has become a rallying point for all regulators as the problem of binary options worsened.

Escalating the War on Binary Options

Canada has followed the US’ lead when it comes to dealing with binary options. The country has not banned them, but is incredibly restrictive when it comes to allowing companies to operate legally within its borders. With a rash of unregulated brokers popping up, Canadian regulators have been looking for ways to clamp down on potentially dangerous firms that are more fraudsters than financiers.

2016 was not a kind year to the industry, and 2017 is not shaping up to be much better. Last year, several European countries made moves to severely curtail the industry, with Belgium enacting a full ban on any binary options.  Meanwhile countries such as France and Holland have restricted companies’ abilities to reach consumers directly via electronic marketing.

In Canada, 2016 was filled with financial regulators taking a more direct role in policing and calling out firms that were operating without permission or regulation. The Canadian Securities Administrators, which oversees all financial regulators in the country, has issued statements on the dangers of binary options brokers, which include fraud, loss of personal information, and massive loss of funds.

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.

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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.

Banc de Binary Unexpectedly Closes its Doors

Banc de Binary, one of the biggest names and strongest pillars of the binary options industry, is closing its doors. The shocking news, which has been reported from sources within the company, brings an end to one of the first and most successful online over-the-counter investment brokers in the market. According to reports, the company has faced mounting problems over its reputation and public standing after a series of highly publicized misfires in 2016, as well as costly fines and sanctions that helped tarnish the company’s name.

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The industry was shocked by the news, as BdB is one of the stalwarts of binary options, and has been a driving force of innovation and improvement in the industry since its early days. The company has stopped onboarding new clients, and has begun the process of returning funds to existing ones as it prepares to shutter all of its operations worldwide.

A Shocking Turn of Events

In an unexpected turn of events, sources within Banc de Binary confirmed to Finance Magnates that the company is in the process of closing its doors, pending an official announcement from its board of directors. The company has stopped accepting new clients, and has begun the process of returning funds to existing customers.

The news is a stunning blow to what was once one of the biggest earners in binary options, and a company many considered the standard-bearer for the industry. Per unnamed sources, the company is closing down after struggling to clean up its reputation following several damaging incidents in recent months. In 2016 alone, the company faced two large sanctions from European regulators and from the US Securities and Exchange Commission, forcing the company to pay over $11 million to settle the claims.

In a more embarrassing turn of events, the company had its license in Belize revoked by the International Financial Services Commission—a regulator long known for its friendly disposition toward the industry. In September, UK football club Southampton FC cancelled its partnership agreement with the company after two weeks without citing a motive, though rumors abounded regarding the reasons.

All in all, BdB could not shake the gray clouds that have been amassing around it despite their best efforts. The company released a notice warning about dealing with unregulated brokers to consumers late in 2016 and spearheaded an effort to eliminate the controversial bonus model that has become a staple of the industry. It even attempted to overhaul its business model to provide more transparency, but it appears all its efforts were for naught.

What it Means for the Industry

While it is a shocking fall from grace for Banc de Binary, the closing highlights a potentially worrying trend for the industry as regulators continue to clamp down and public opinion remains negative. Financial watchdogs across Europe have tightened their regulatory frameworks, and in some cases even moved to ban the industry entirely.

France banned advertising across all electronic media for binary options, with Germany and others contemplating similar legislation. Belgium has gone a step further and completely prohibited the industry from operating within its borders.

Meanwhile, the regulated members of the industry continue to be harmed by the image problems caused by unregulated brokers that engage in fraudulent and predatory practices that have landed the industry as a whole in legal hot water.

With one of its biggest names closing, brokers will now have to struggle with the thought that the current path may be unsustainable over the long-term. Only time will tell, how the industry combats the mounting challenges emerging in 2017.

IG Group Unconcerned By New French Regulations

IG Group, one of the largest over-the-counter investing providers in Europe, have made their first official comments on France’s new sweeping ban on the industry’s advertising to consumers. The company expressed their lack of concern for the new regulations, which went into effect at the start of 2017, and have noted that the laws could even provide a competitive advantage in the medium-to-long term as other companies struggle to adapt.

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The investment firm noted that the regulations apply to a certain subset of the CFD, binary options, and foreign exchange industry, but they had previously implemented new rules that would exempt them from the ban regardless. Additionally, the company’s revenues from the French market are not estimated to be a major part of its overall earnings. IG Group already lost billions in market capitalization in response to new regulations implemented in the UK as overall sentiment turns against the industry in Europe.

New Ban a Competitive Edge?

As some firms scramble to adjust after France’s new “Sapin II” law goes into effect to start 2017, IG Group seems content to stand pat and hold its course. The company noted in its first official comments following a series of regulatory losses for the industry that it did not see a major hurdle from France’s new law. Sapin II is designed to create more transparency in investing, but includes language that prohibits the advertising, through any electronic medium, of any high-risk and high-leverage online investment products. This includes foreign exchange, binary options, and in some cases, the contracts-for-difference that make up a large portion of IG’s earnings.

In prepared statements, IG declared on Monday that the new law would not “have a material negative impact on its business in France in the short-term”. IG noted that most of its current clients would not be affected, and their onboarding of new investors would not see a large drop-off, since they believe that their products are exempted thanks to their compliance with the ban’s restrictions. Sapin II’s limitations on advertising are based on the amount of leverage provided by investment firms, which generally includes a broad swath of the industry.

On the other hand, IG claims that it had already implemented new measures in adherence with the new regulations, including loss-by-position guarantees for new clients. Essentially, according to the company, this will guarantee that clients cannot be left with negative account balances in cases where trades go awry. Thus, IG sees a strong opportunity to capitalize on a French market that will be left mostly wide open by a dearth of viable investment options for consumers looking for OTC investment products.

Will The Industry Adapt?

While IG seems unconcerned of the new developments, some industry experts foresee compliance being difficult for many firms. For one, the new ban’s stipulations are less clear-cut than many companies believe, meaning that adhering to new regulatory frameworks is not a simple matter of limiting leverage across all products. Instead, compliance is defined on a more product-by-product basis, and thus not easy to implement in one fell swoop.

Many have foreseen that the industry, at least in France, will suffer greatly over the medium-to-long term as revenue streams dry without a viable alternative. Additionally, similar restrictions implemented in Belgium, Germany, and Holland have started to close doors for OTC investment providers. The result could be a radically different industry from the one seen today.

IG Group could very well survive, but is still contending with harsh regulations imposed by the UK’s FCA, which sent investors into a panic and wiped away millions in market capitalization for the company.

SpotOption & Tools For Brokers Team up For MT4 Binary Options Add-On

Well-known binary options provider SpotOption has announced the launch of its new plug-in for MetaTrader 4, the widely popular trading platform. In collaboration with Tools For Brokers, a business-to-business technology solutions provider, the company has created the tool as a way to add value for brokers looking to simplify their binary options offerings.

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The plug-in is designed for seamless integration, and could create high demand for brokers who are looking to expand their services without having to pay the heavy cost of a completely separate platform for different asset offerings. Traders will be able to handle most transactions and processes directly from MT4, meaning that use will not require any new knowledge or heavy adoption costs.

The launch has been widely lauded by industry analysts, although there is a small hurdle on the horizon in the form of MT5. MetaQuotes, the company that offers the MT4 platform, recently launched the newest version of their trading platform, and has been pushing for higher adoption, even resorting to pushing out its MT4 support to force brokers and traders to join.

A New Solution for Binary Options

SpotOption announced via a press release this week the launch of their new plug-in for MetaTrader 4. The plug-in, which was developed in partnership with Tools For Brokers, is completely compliant with regulations and designed to expand brokers’ offerings. Forex providers and operators who already offer MT4 as their main trading platform will now be able to offer binary option trading with no need for extra software or even a complicated installation. The plug-in is designed to have seamless integration, meaning it requires no extra steps, redirections, or set-ups on the part of traders.

The new plug-in will simplify the process for traders even further by displaying price feeds, instruments, and allowing withdrawals and deposits directly through MT4. MetaQuotes’ platform is already known for its versatility and adaptability, making it the platform of choice for many brokers in the industry. SpotOption’s plug-in will create a shared account with MT4 activities, and allow for shared wallet features with real-time synchronization, meaning that traders will be able to directly place orders on the platform. Additionally, traders who are looking for binary options will be able to use MT4’s expert advisor functionality for binary trades.

On the broker side, the new plug-in is an intriguing opportunity to expand customer retention by enabling firms to provide more services at similar costs while keeping customers that would have otherwise fled to binary options providers. Moreover, it will allow for simplified offerings on the part of operators, creating a more appealing product

Smooth Sailing, For Now

The new plug-in has the potential to disrupt the industry over the short-term considering providers will now be able to provide a wider spectrum of services without having to stretch themselves too far. For Forex providers, it offers a unique opportunity to create an attractive offering for customers who are more interested in binary options trading.

However, there are some potential storm clouds on the horizon.  While the new product should give SpotOption an excellent added-value offering, MT4 could soon be on the way out. MetaQuotes recently launched a newer version of their platform, MT5, and have been aggressively pushing for adoption across the board. Over the short-to-medium term, it is unlikely to make a major difference in SpotOption’s plans. MT4 is solidly entrenched as the industry standard for trading platforms, and widespread conversion will take time. However, MetaQuotes has been reportedly engaging in heavy-handed tactics to encourage adoption, potentially creating headwinds for SpotOption’s newest plug-in.

Italy’s CONSOB Steps Up Fight Against Binary Options

Italy’s National Commission for Companies and the Stock Exchange (CONSOB) has stepped up its efforts against the binary options industry in the month of December. The watchdog has issued a string of warnings and taken direct action against companies in related industries.

The moves by the regulator come as the fight between the industry and governments across Europe reaches a fever pitch. CONSOB has issued over twelve warnings in December so far, with five coming as recently as this week alone. According to the watchdog, none of these companies is licensed or authorized to provide financial services in the country.

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Public sentiment has turned against the binary options industry in 2016, as several countries became more aggressive in attempting to block companies from operating within their borders. Others have tightened their regulatory frameworks to ensure compliance. However, many have wondered at the wisdom of working against the industry, instead of working with it to find a better course of action.

Italy Warns Against Several Brokers

Italy’s financial regulator has been surprisingly active thus far in December, already having issued several warnings to consumers regarding the activities of several binary options brokers. On Tuesday, the company issued statements on brokers www.binarybrokerz.com. www.gmibanque.com which is operated by GMI Bq, www.profitmaximizer.com, and International Partners. Per CONSOB, none of those companies have been authorized to operate in Italy, and none have shown the necessary documentation to prove they are regulated anywhere else in the European Union.

Tuesday’s notices come on the heels of similar declarations made in recent weeks against a string of binary brokers. These companies seem to have taken up residence in Italy after having been bounced from several other major European markets including France, Belgium, Holland, and Austria.

In some cases, the companies are simply operating without a license. However, some of the brokers CONSOB has alerted consumers about have been revealed to be trading scams by regulators across Europe. As Italian officials cannot investigate fully due to a lack of documentation, they have warned consumers to pay closer attention to the fine print. Additionally, CONSOB believes that some offer fraudulent High Yield Investment programs.

Tuesday’s action marks the third such move taken by Italy against the industry, and it echoes similar battles being fought across Europe against the unregulated side of the binary options market.

Harsher Actions to Come?

While Italy seems to have stepped up their actions in the fight against fraudulent and unregulated brokers in the binary options industry, their enforcement efforts still lag behind other major regulator in the region. France has banned the use of direct marketing and advertising for what they deem “high risk” products—which most likely will include binary options—while Belgium has taken an even more drastic step by completely banning the industry within its borders.

Others have proposed similar actions, with Germany debating a measure, and Holland attempting to pass a bill similar to France’s. Even Cyprus, long known as a friendly haven to the binary options industry, has taken steps to tighten its regulatory framework and increase the cost of regulation for companies looking to enter its financial market.

Despite all these actions, some industry insiders have openly questioned if fighting against binary options as a whole is a wise choice, as bans also affect those companies that have made efforts to operate completely above board and comply with all regulations. In their opinion, forcing out regulated and reputable companies creates a vacuum that allows fraudsters and less compliance-oriented firms to engage in predatory practices with little or no fear of reprisal.

Spain Prepares to Greet British Financial Companies

Spain’s Comisión Nacional del Mercado de Valores (CNMV) announced on Monday a new program designed to help financial services providers, including binary options brokers, expedite their moves from the UK to Spain. The program is a direct result of the UK’s “Brexit” vote and the uncertainty floating around the country’s access to Europe’s single market. Many companies have already expressed fears of being shut out of the market, especially financial services providers whose licenses can be “passported” to any member of the European Union.

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Since the referendum, several binary options brokers, as well as other financial service providers, have been considering moves to different European countries, with several governments already planning to offer similar programs. For Spain, the government’s program is designed using these proposals as a base, but by providing other improvements, the CNMV hopes will make the country a more attractive destination. Officials foresee the new program not only helping UK-based companies, but also turning Spain into a new financial hub for Europe in the near future.

Spain Opens its Doors

The CNMV has created a new program aimed at converting Spain into a more attractive destination for financial services companies based in the UK that run the risk of losing access to the EU’s single market. As part of the new program, the Spanish regulator has prepared a fast-track process to help these companies transfer many of their existing regulatory documents easily while expediting the regulation process by months. Under the plan, FCA-regulated companies will be able to directly transfer many of their credentials to the Spanish application. Some of these requirements include capital buffers as well as outsourcing agreements in applicable cases.

As a result of “Brexit,” many UK-based binary options providers have started looking for greener pastures as a way to avoid losing access to the European Union, as well as avoiding costly regulation processes elsewhere. Countries such as France have leaped at the opportunity and announced plans for similar programs.

Spain is attempting to take those plans and upgrade them, making itself the most attractive option for these companies by offering a faster, simpler, and more transparent process. As part of the program, the CNMV will offer all of its registration documents and even educational resources on regulation in English.  Additionally, they have provisioned for guides who will assist British companies through the registration process entirely in English and continue to work with them for six months after receiving approval.

A New Financial Center for Binary Options

Spain and the CNMV are looking at this new fast-track program as a way to return Spain to the forefront of financial services in the European Union. Despite its initial targeting of British companies, the CNMV hopes to expand the program to offer similar services to other countries in the hopes of attracting more business. Additionally, a simpler regulatory process should help binary options brokers who are looking at transparent frameworks that will enable them to operate across Europe.

For the industry, the new fast-track is an appealing proposition, as it marks a departure from the general sentiment against the industry across Europe. As countries such as France and Belgium shut their doors to the industry, Spain might become a new friendly haven. With the EU’s “passporting” system, Spanish regulation could grant binary options brokers a credible and effective regulatory framework while helping restore the industry’s image across the union.

For Spain, the possibilities are endless. Now that the country is in the midst of an economic revival following several years of financial trouble, the government is effectively seeking new ways to make that rebound sustainable.

BuzzTrade Parent Company Renounces CIF License

The Cyprus Securities and Exchange Commission announced via a press release on Friday that binary options broker Air Finance Pro Ltd. renounced its Cyprus Investment Firm (CIF) license and will no longer be regulated by the watchdog. The company, which operates its business through several websites including www.investing-area.com, www.buzztrade.com, and www.ytfrtradeltd.com, has been in hot water with CySEC since the middle of 2016.

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The brokerage firm had their license suspended in June over non-compliance issues the Cypriot regulator claimed were highly detrimental to investors and customers alike. CySEC followed up its initial suspension with two extensions of the ban, which extended well into the end of the year.

The company chose to let its license lapse and will no longer be licensed by any regulator in Europe, leading to questions about its future in the region. Air Finance’s position could become a new norm as more companies choose to ignore increasingly restrictive regulatory frameworks and operate outside of traditional licensing.

Air Finance Walks out on CIF

Air Finance Pro has opted to let its CIF license lapse after failed efforts to have its suspension lifted by CySEC. The binary options broker has had its license suspended since June after the Cypriot regulator charged it with non-compliance.  According to the watchdog, the broker failed to meet several requirements tied to operations and regulation, specifically in reporting and filing obligations. CySEC argued that non-compliance would harm the company’s customers and investors alike, choosing to suspend its license

The penalty was later extended twice after Air Finance repeatedly failed to meet compliance standards. During the suspension, Air Finance was not allowed to onboard new clients, receive, process, or execute trades, provide any investment services in Cyprus or abroad.  Additionally, it had to display a notice of suspension on its websites. It is unclear if the company broke the terms of its suspension, although it did close several of the websites it operates.

Under its renouncement, Air Finance will still be required to settle any obligations related to investment services that have lapsed within three months. Without a CySEC license, Air Finance will lose its “passporting” privileges, which allow it to use its CIF license to establish offices elsewhere in the EU without requiring individual licenses. It has become increasingly difficult for binary options providers to become regulated in Europe as sentiment turns against the industry.

The revocation of the license will become official early in 2017 and it is unclear if Air Finance will continue to operate without regulation in Europe or if it will seek new licensing elsewhere.

What Next for Air Finance?

While it is not the first company to lose its license, Air Finance’s next moves could be the beginning of a new trend in Europe. As regulatory frameworks become more costly and restrictive, many companies might choose to forgo licensing. Additionally, there are fewer countries willing to extend financial services licenses to binary options brokers as more governments implement sanctions against the industry as a whole.

Air Finance has not announced plans to apply for licensing elsewhere, but there is a real possibility it might simply continue to operate without regulation. If so, it would become one of the more high-profile companies to go that route, pointing to a new potential path for brokers that are being suffocated by expensive regulation and competitive disadvantages.

As public sentiment turns against the industry, European governments, and even the EU itself, have taken legal action against binary options and related industries. Belgium entirely banned the industry, while France blocked advertisements and marketing communications by binary options brokers.