Tag Archives: Binary Options

ASIC bans the sale of binary options to retail clients

ASIC has made a product intervention order banning the issue and distribution of binary options to retail clients.

The ban will take effect from Monday 3 May 2021 after ASIC found that binary options have resulted in and are likely to result in significant detriment to retail clients.

ASIC reviews in 2017 and 2019 found that approximately 80% of retail clients lost money trading binary options. ASIC found that binary options are likely to result in cumulative losses to retail clients over time because of their product characteristics:

  • the ‘all or nothing’ payoff structure, where one of the two possible outcomes for a binary option contract is that the retail client will lose their entire investment amount;
  • short contract duration (the average contract duration of binary options traded with one provider was less than six minutes); and
  • negative expected returns (that is, the present value of the expected payoff for a binary option contract is lower than the initial investment).

Commissioner Armour said, ‘Binary options’ product characteristics make them incompatible with investment or risk management use by retail clients. ASIC’s product intervention order will protect retail investors from these harmful products at a time of heightened vulnerability.’

ASIC estimates that retail clients’ net losses from trading binary options were around $490 million in 2018. The size of the market in Australia has since reduced significantly after ASIC issued a warning in April 2019 against providing unlicensed or unauthorised services to clients located in several foreign jurisdictions. Australian retail clients are estimated to have made net losses of more than $6.7 million in 2019.

ASIC’s binary options ban brings Australian requirements into line with prohibitions in force in comparable markets and follows the commencement on 29 March 2021 of ASIC’s product intervention order imposing conditions on contracts for difference offered to retail clients.

The order will remain in force for 18 months, after which it may be extended or made permanent. Civil and criminal penalties apply to contraventions of the product intervention order.

Background

A binary option is a cash-settled, over-the-counter (OTC) derivative entered into by two counterparties—the binary option issuer and the client. The ‘all-or-nothing’ payout under a binary option contract is determined by the occurrence or non-occurrence of a specified event in a defined timeframe. This can include an event related to movements in the price of a financial product or a market index (for example, the price of gold increasing in 30 seconds) or an economic event (such as a central bank interest-rate decision).

Regulatory Guide 272 Product intervention power provides an overview of ASIC’s product intervention power, when and how ASIC may exercise the power and how a product intervention order is made.

On 22 August 2019, ASIC released CP 322, seeking feedback on proposals to use its product intervention power to address significant detriment to retail clients resulting from binary options and CFDs (refer 19-220MR). CP 322 attracted more than 400 responses from consumers, consumer groups, CFD issuers, industry bodies and other stakeholders.

On 23 October 2020, ASIC made a product intervention order imposing conditions on the issue and distribution of contracts for difference (CFDs) to retail clients (refer 20-254MR). From 29 March 2021, ASIC’s order strengthens consumer protections by reducing CFD leverage available to retail clients and by targeting CFD product features and sales practices that amplify retail clients’ CFD losses.

In addition to the product intervention orders, ASIC’s actions to address concerns about binary options and CFDs include:

  • enforcement action to address misconduct
  • public warning notices and other statements
  • surveillance projects and thematic reviews
  • stronger regulations
  • extensive retail client education campaigns and guidance for binary option issuers.

More information about ASIC’s supervision and enforcement work is available on our website. ASIC’s Moneysmart website has further information about binary options.

Canadian securities regulators warn public about Crypto trading scam using fake accreditation

The Canadian Securities Administrators (CSA) is warning the public about a trading scam advertised under the name of Mercury Crypto Invest (Mercury). Mercury posted a series of online advertisements, primarily on Kijiji, offering an investment opportunity to people across Canada.

Mercury represented itself as an “accredited trader” with the Investment Industry Regulatory Organization of Canada (IIROC) and the CSA. There is no such thing as a CSA-accredited trader and Mercury is not registered to trade in, or advise on, securities or derivatives with any securities regulator in Canada.

The online advertisements promised a guaranteed return and a 95 per cent “win rate” through investments in binary options and cryptocurrencies. In 2017, the CSA announced a ban on binary options, making it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual.

Members of the CSA’s Enforcement Committee collaborated, through its Investment Fraud Task Force, to identify the scam and quickly take steps to reduce the risk to Canadian investors. The Task Force worked with Kijiji to have the online advertisements removed. This alert is being issued due to the concern that the same advertisements, or variations on them, may reappear on Kijiji or other online platforms.

The CSA encourages investors to watch out for the following red flags in order to avoid investment scams:

  • Ignore promises of “guaranteed” high returns with little or no risk: Generally, the higher the return, the higher the level of risk, and no investment can guarantee a 95 per cent return. Make sure the opportunity is suitable for your investment goals before investing your money.
  • Be wary of the latest trends and feeling pressured to buy: Trading scam artists use the latest trends in the news such as cryptocurrencies to entice investors into their schemes. If you don’t understand what the investment is about, get clarification as part of your research into the opportunity.
  • Do not trust claims of insider information: A scam artist may claim to have information that nobody else knows about a company. You have no way of knowing if this information is true. Even if it is, trading on inside information is illegal in Canada.
  • Check registration: Before working with any adviser or investment firm, find out if they are registered. Individuals and firms selling securities are required to be registered by securities regulators to sell you any investment. Check registration and any disciplinary history through the CSA website.
  • Get independent, professional advice: Take some time to consult with a person who is not participating in the investment, such as a lawyer, banker, accountant, financial adviser or someone else with financial expertise before investing. Don’t feel pressured to hand over your money until you’ve had some time to carefully consider the investment.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

60 Seconds Strategy Binary Options

60 Seconds Strategy Binary Options

60 seconds strategy binary options is options, which have expiry time is one minute. It means, that you purchase option and already after one minute will have result.

 

Trade by 60 seconds turbo-options became so popular – and experienced traders and beginners work with it. Precisely this options allow to get ultrafast profit, and it size limited only by size of bet, that you made. For one minute you can win until 90 % from invest.

 

Minute binary options have their undeniable advantages: it’s possibility to trade in any time (session), carry out a lot of transactions for short time (increasing chance to win), unreal big selection of platform-brokers, which offer rather advantageous conditions (bonuses, big selection of assets, absence of commission).

 

You can use many strategies in trade by 60 seconds binary options, because they available for many methods. But approach, in any case, is a little bit different: you need to take decisions too fast, and instantly react on situation on market.

 

More information: FraudBroker.com – http://fraudbroker.com/60-seconds-strategy-binary-options/

Options contract

A contract that, in exchange for the option price, gives the option buyer the right, but not the obligation, to buy (or sell) a financial asset at the exercise price from (or to) the option seller within a specified time period, or on a specified date (expiration date).

Options education

What is an embedded option?

How to interpret the put call ratio

Bull Spread

An option strategy that achieves its maximum potential if the underlying security rises far enough, and has its maximum risk if the security falls far enough. An option with a lower striking price is bought and one with a higher striking price is sold, both generally having the same expiration date. Either puts or calls may be used for the strategy.

See also Bear Spread.

What is an embedded option?

Options: Pros and Cons

Binary Options

A binary option is an option that pays either a fixed amount or nothing, depending on whether a certain condition is fulfilled when the option expires. These types of options are different from plain vanilla options. Binary options are also referred to as all-or-nothing options or “digital options”since it is a type of option where the payoff is all or nothing.
Binary Options trading is considered as one of the fastest growing simplified trading products.
Binaries are considered as a mass market financial product as it empowers traders with a flexible trading method without the complexities involved in trading traditional vanilla options.

How to Make Money Trading Binary Options

What are binary options