The Cyprus Securities and Exchange Commission (CySEC) is establishing amendments to the regulation of binary options brokers in an attempt to bring transparency into the market, according to a notice published on the website of CySEC on Monday.
The changes aim to provide adequate information to clients about binary options.
The watchdog has informed companies that provide binary options trading services and that fall under its regulation about the changes it proposes, requiring them to review their procedures in the trading platforms and to make the needed changes within the next three months if they don’t comply with the regulation.
Brokers have to provide traders with the option to cancel transactions in binary options within a reasonable time, but not less than five seconds after the purchase of the binary option. They also have to provide services in relation to binary options that are constituted and traded in a manner similar to other derivatives and ‘traditional’ financial instruments included in the law.
In order to offer full transparency and operate in a way that is fair to clients, the CySEC requires brokers to provide clients with sufficient information regarding the identification of the underlying asset of the binary option, including the trading venue, as well as the bid, ask, last and strike prices. In addition, they have to provide reference to the feed provider details, historic records, presented graphs, availability of the binary option, and full explanation of the buyout methodology.
The regulator noted that binary options with duration of 30 and 60 seconds are not considered to fall under the proposed regulation.