New CySEC Regulations to Radically Change Binary Options Platforms
The new regulations touch on the operations of both the brokers and the clients. For the brokers, the regulation requires them to “operate in a way that is fair to the clients.” The clients have the right to adequate information regarding their contracts for transparency sake. The regulations exempt binary options contracts that have a duration of more than 30 seconds.
Traders from the European Union have been disadvantaged for sometime due to corruption. To deal with this, the European Securities Markets Authorities (ESMA) pressured CySEC to step in and make the necessary adjustments. CySEC focuses on transparency as a key to the desired changes.
Brokers are required to display the underlying asset on the platform. For example, for a client trading crude oil, WTI Crude Oil May 2016 NYMEX has to be displayed at all times.
The price stream has also been regulated. Instead of having single prices feed, the bid and ask quotes need to be displayed and placed next to the exercise price for it to be clear and visible to the client.
As for the brokers, the methodology they use to calculate the strike price should no longer be a secret. Those providing their feeds should also be disclosed. When the binary option expires, the bid, ask, strike and last price should all be displayed in a pop up message.
CySEC has reduced the period of time that clients can cancel out a purchase from five to three seconds. If a brokerage offers a client a buyout, they must disclose the method they have used to determine its conditions.