B.O. TradeFinancials bids goodbye to Cypriot license as binary options fortunes sour

Maria Nikolova

BOT has notified the Cyprus Securities and Exchange Commission of its intention to withdraw its Cyprus Investment Firm authorization.

The fortunes of binary options businesses have turned sour in Europe, with the latest piece of proof coming from B.O. TradeFinancials Limited (BOT), a subsidiary of TechFinancials Inc (LON:TECH).

TechFinancials has earlier today announced that BOT is bidding goodbye to its Cypriot license. The binary options firm, operating brands like OptionFair, has notified the Cyprus Securities and Exchange Commission (CySEC) of its intention to withdraw its Cyprus Investment Firm (CIF) authorization.

BOT is in the process of notifying customers of its intention to terminate all of its activities related to operating its brand, OptionFair and subsequently, to return all client funds.

Let’s recall that on 6 February 2018, TechFinancials announced the termination of the proposed sale of its shareholding in BOT, following the decreasing levels of BOT activity during 2017. For the six months ended June 30, 2017, BOT’s revenues were €164,000 (down from €1.38m for the same period a year earlier) and the loss for that period was €105,000 compared to a loss of €231,000 for the financial year 2016.

In the meantime, the European Securities and Markets Authority (ESMA) is tightening its grip on binary options. The regulator plans a prohibition on the marketing, distribution or sale of binary options to retail clients. ESMA is currently minded to adopt this measure as the significant investor protection concerns relating to this product are due to inherent features of the product that are unlikely to be sufficiently addressed through certain restrictions on the product (such as minimum duration contract periods).

In particular, the pricing structure of the product means that, on average, investors will experience negative expected returns without providing any clear compensating benefits to retail investors (e.g. the hedging function served by vanilla options). The alternative option of a total ban that would include professional clients is not under consideration due to the lack of evidence of harm to this type of client.

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