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.

Download

M4Markets Launches MAM / PAMM Account

MAM/PAMM Solution

Multi-account manager allows users to manage multiple trading accounts and sub-accounts, using a single terminal. Diversify and expand your portfolio of investors and manage their funds from a single trading account.

Leverage the M4Market’s flexible MAM/PAMM solution to trade and manage multiple accounts from a single interface under one master account. The solution provides direct connectivity with M4Market’s MT4 & MT5 ensuring a seamless experience.

Features and benefits of MAM/PAMM Account

  • Most advanced post-trade allocation tool
  • Allows Expert Advisor (EA) trading of managed accounts
  • Unlimited number of sub-accounts
  • Manage several accounts having different strategies
  • STP on master account for bulk order execution
  • Monitor commissions and performance in real time
  • No limit on trading accounts and deposit amount

Why open MAM/PAMM Account with M4Markets..?

  • Deep liquidity
  • Raw pricing connectivity
  • Fast order execution
  • Diverse product range

FBS Introduces New Currency Pairs

On February 5, FBS added CFD-cash to the list of trading instruments in MetaTrader 5. It’s more convenient than just CFD. You can choose when to close your orders because there is no expiration date, and your orders won’t close automatically.

Here is the full list of CFD-cash available at FBS:

  • JP225 (Nikkei 225)
  • US100 (NASDAQ100)
  • US30 (Dow Jones)
  • US500 (S&P500)
  • AU200 (Australia 200)
  • EU50 (Eurostoxx50)
  • FR40 (CAC40)
  • HK50 (Hang Seng)
  • UK100 (FTSE100)
  • DE30 (DAX30)
  • XTIUSD (WTI)
  • XBRUSD (BRN)
  • ES35 (Spain35)
  • XNGUSD (Natural GAS)

If you have any questions, feel free to contact FBS 24/7 support team. Trade wisely and earn big with FBS.

FBS Launches Free Educational Forex Course

Forex Intensive is the free course that our experts have prepared for you. You have five weeks to level up your trading knowledge. It is aimed at both beginners and experienced traders.

All the materials, which are articles and webinars, will be published daily, and you can get access to them free. Subscribe to FBS Forex Intensive and miss no chance to become a better trader.

The course is five weeks long. Every week subscribers get a new email with the Forex Intensive program according to their level of knowledge. It allows European traders to educate in real-time with fresh materials and use the opportunity to join the webinars where it is possible to ask any questions to FBS analysts. The online format of the course helps to gain the information anytime and anywhere it is convenient for traders.

Within five weeks, traders learn the following topics:

  • Week 1: Forex essentials.
  • Week 2: Fundamental analysis.
  • Week 3: Technical analysis.
  • Week 4: Trading instruments.
  • Week 5: Management tips.

Despite the fact that Forex Intensive lasts the whole month of October, all the materials will be available for free anytime.

ForexTime Closing Its FX Retail Business in Europe

The reason why FXTM decided to suspend its retail business happens to be quite straightforward. The Cypriot entity sent emails to clients explaining that as of this date it will provide its services in the EEA region exclusively for professional clients and institutional traders.

In light of internal business decisions to focus on other markets and grow their B2B operations, many forex brokers, like Exness, decided to close the retail business in EU/EEA, including the UK.

One of the reasons stated for the exclusive focus on the institutional business is the recent changes in the regulatory environment. Indeed, the retail FX market in Europe is becoming relatively challenging, which is why many brokers are looking into new opportunities in the wholesale liquidity and clearing market.

FXTM’s EU website also dropped the option of onboarding retail traders and is now only taking professional clients.

ESMA’s restrictions have already had a more severe impact than most retail brokers anticipated, though it was offset by a surge in crypto volumes over the past two years. For instance, the European regulator has banned any welcome bonuses or other incentives that encourage clients to trade CFDs. This was problematic for many firms who often rely on such bonuses and high leverage as a means of attracting clients.

FP Markets launches intuitive Mobile Trading App

One of Australia’s leading fintech companies, FP Markets has announced the launch of The FP Markets Mobile App which is intuitive and feature-packed, allowing traders to carry their trading accounts with them in their pocket.

Available on all Android and iOS devices, the FP Markets Mobile Trading App offers trading on Forex and CFDs across shares, indices, commodities and cryptocurrencies.

Download Now- Android Android and The App store iOS

FP Markets Mobile App Key Features

  • Deposit and withdraw from within the Mobile App
  • Use the ‘Favourites’ menu to create a faster and seamless trading experience
  • Access their account and change settings via the Client Portal
  • Access top-tier liquidity with real-time pricing
  • Conduct research and analysis using a range of trading tools
  • Log in to their MetaTrader 4 account using the same credentials

FBS Personal Area is in Polish Now

FBS, your reliable CySEC licensed broker, is happy to announce that the Polish language is now available in both web and app versions of the Personal Area (PA). The Polish language is widespread among European traders. Many of them prefer to use trading products in local languages. It makes the whole trading experience much more convenient. And FBS gives them such an opportunity. From now on, Polish-speaking traders are able to set their trading process in the language of their liking.

FBS is continually improving the quality of its products. The company has more than 11 years of expertise in the market and appreciate the feedback from the clients. That is why the company presents a new language option.

FBS Personal Area connects traders with the trading platform of their choice. In the PA, traders create new accounts, manage their funds, check the transaction history, provide personal details for secure trading, and even more.

What is more, FBS created its own application called FBS – Forex Broker, where clients can use all the web PA functions. The user-friendly app is available for Android users. Get it on Google Play and check out the local language.

FBS is an acknowledged, CySEC licensed international online Forex broker and the official trading partner of FC Barcelona. FBS is a broker with an international outlook that serves clients in Asia, Latin America, Europe, and the MENA. Its primary focus lies in offering financial products for currency, metals, and indexes trading for clients with different goals and backgrounds. The company features a low barrier to entry and top-ranking apps. Over 11 years in the field, the broker won 50 international awards, including Best International Forex Broker, Best Forex Brand, and Most Progressive Forex Broker Europe.

LegacyFX Partners With Sum And Substance Ltd.

LegacyFX is pleased to announce their collaboration with Sum and Substance Ltd., a UK based KYC and AML compliance firm, across all our platforms.

SumSub provides a comprehensive platform specifically built on a risk-based approach and compliant with various regulatory bodies such as, FATF, FINMA, FCA, CySEC, and MAS. Notable clientele of theirs include MasterCard, Flippa, Exness, Danapay, YouDo, the National Bank of the Republic of Belarus, Dabrabyt Bank, National Bank of Ukraine, and Pravex Bank. Overall, their toolkit enables customer onboarding, KYC verification, AML procedures, and proper data handling measures, all in a user friendly design. They do this by determining the authenticity of an identifying document, comparing the photo in the document to the user’s selfie, checking the user’s age and nation of origin, automatically flag forged documentation, correctly identifies liveliness of real human faces versus holograms, and checks photos and documentation against their internal database of fraudulent materials.

Violeta Koleva, Risk & Fraud Officer :

“Our goal was to make our KYC process easier and faster not only for our customers, but also for our Compliance Department as well. With SumSub, we will now have fast and transparent checks that allow us to identify fraud, fake documents, and money laundering activities, all in a people-friendly interface that is customized to our specific needs to not only improve our workflow but also upholds our security standards.” 

The company aims to use SumSub’s identifying documents verification, AML screening (PEP, Sanctions, Adverse media checks), payment fraud prevention, and liveness/face matching services. Their payment method fraud prevention and verification tool assures that a credit card belongs to the user by identifying potentially stolen bank cards before a transaction is even made. This is achieved by a user uploading a photo or screenshot of their payment method right before the transaction, with SumSub verifying it instantly, while complying with PCI and DSS regulations of blurring the cards information automatically.