Binary options ‘industry’ takes last gasp – forms unofficial band of back street lobbyists as future dwindles
A good look at why this morning’s secret meeting of binary options brand and platform/market maker owners is no more than a last ditch attempt to save their nefarious business from relegation.
Today, some of the main perpetrators of off exchange binary options fraud have taken what could be considered a last-ditch attempt to save their business which has been the subject of regulatory, government and mainstream media derision over recent months, often at very high profile level.
Thus far, senior government officials in Israel, Belgium, France, the United States and China have done their absolute best to put a stop to binary options being sold to their populations. Israel’s regulatory authority chairman Shmuel Hauser has vowed to expedite laws to quash the entire industry that he considers is bringing disrepute upon the entire nation of whose financial services regulator he presides, and newspaper reporters including senior Times writers in London consider the entire business a fraudulent activity.
FinanceFeeds has over the past few months conducted a substantial investigation into the activities of the binary options brands and the six major platform providers / market makers that provide the trading environment, and continue to take the view that this is not part of the genuine electronic trading industry at all, hails from a totally different background, and is amoral and nefarious.
Just five years ago, the retail binary options business was a fledgling industry, however it has become a vast and international enterprise, with just shy of 300 currently active white label brands which are spread across 6 platforms which are specially designed for white label partners to quickly establish their business and begin to onboard retail customers.
Between 2011 and now, many binary options brands have come and gone. The turnover and lifespan of brands being often quite short, their business model being to establish a call center, take a full end to end solution from one of the 6 dedicated binary options platform providers.
They then call lead lists which in many cases have been purchased from affiliated entities in the online gambling sector in order to extract first time deposits which are often blown within the same day, before passing the lead to a retention desk whose duty it is to extract a further deposit which is then often blown quickly.
After this process, the customer often then does not deposit more – after all, most binary options brands have as much in common with the financial markets industry as quails eggs do with electrolytic capacitors in that most of the ethos behind the binary options business emulates that of an online casino and the customer lists are often compatible with gaming rather than financial markets.
Local regulatory authorities in Cyprus, Canada, Israel, United States, Britain, Australia and New Zealand have over the past few years issued warnings against unlicensed binary options companies soliciting in their region. In some cases against firms that are regulated in one jurisdiction but do not have a license to operate in another, which is an attempt to raise awareness among retail customers of the potential perils of ‘investing’ in binary options as best possible with no actual legal jurisdiction over preventing it.
So far, three countries have outlawed retail OTC binary options completely, those being the United States, Israel, and most recently Belgium. In the United States, binary options must be executed through one of two dedicated central exchanges, NADEX and Cantor Exchange. France, China and Belgium have also gone as far as to outlaw the promotion via advertising on online media of by such firms.
Mainstream government officials, regulators and new sources have been bearing down on binary options providers recently, and this week, Professor Shmuel Hauser, Chairman of the Israel Securities Authority, who presides over the financial markets sector in the country which is home to all of the binary options providers and a large proportion of their brands, and the lion’s share of overseas brands also using Israeli platform/market makers on which to base their business.
It is clear that the day has passed for those wishing to go down this route to extract money on the pretense that binary options platforms are a genuine trading environment, as the entire world has caught on to the fact that this is a very real and large scale danger to retail consumers worldwide.
Operated by people who have the morals of a tomcat, the entire business has been under scrutiny for several years however only now is something actually being done about it.
For those who consider binary options to have any future, it may be time to redress this thought. As FinanceFeeds has pointed out before, binary options is worse than gambling because binary options brands and the platform developers which offer market making are disguising a gambling product with odds weighted completely in favor of the house as a bona fide financial markets product when it bears absolutely no resemblance to such thing whatsoever.
The career paths of the platform developers and brand owners are in no way similar to those of the bona fide technology and financial services sectors of London, New York, Chicago or Hong Kong. Instead of a well documented career that has resulted in refined experience and top quality relationships with the very best in the business, founded on internships with blue chip companies, followed by several senior executive positions within technology providers, banks and institutional firms before heading toward leadership with a comprehensive understanding of the industry and the refined business ethic that goes with the very top leaders in the FX industry, binary options is a total contrast, a world of low-brow criminals with no career to speak of other than buying (and in some cases stealing!) leads from gambling sites.
Today, the leaders of this back street business have begun to make an attempt toward founding a trade organization as a method of fighting back at the massive and international disdain which is multi-layered, inter-governmental and inescapable, in the foundation of a new unaffiliated trade body called European Brokers Association, or EUBOA, which is a rather awkward acronym to say the least.
Let’s dissect what EUBOA really is.
Well, it is not a recognized trade association, and most certainly, it is very unlikely that any national regulatory authority in any major region that is synonymous with the genuine financial markets business would entertain the establishment of such a thing.
The Financial Services Authority in Britain has decided not to license binary options as a financial markets product, despite considering doing so relatively recently. The FCA’s decision not to proceed was down to the number of scams that have been perpetrated by binary options firms.
France and Belgium will not hear of it, either, and although not in Europe, Israel will not hear of such a thing despite most of the platform providers and market makers in the binary options business being based in Israel.
What this really amounts to is a number of individuals with a vested interest in keeping the taps open on the inward cash flow from binary options, forming an unrecognized band of men to attempt to lobby global governments and mainstream media.
When considering who is involved in this, and how the ‘organization’ was founded, its stance and structure becomes more clear.
A secret meeting took place this morning in Cyprus, to begin the process of forming the EUBOA.
At the meeting were senior members of staff (I will not call them executives) from major binary options firms including SpotOption and TechFinancials. SpotOption, which is the company leading the lobby, has a Cyprus entity which rather tenuously calls itself an ‘exchange’, which is an absolute misuse of the term. None of these companies are exchanges, neither are they OTC derivatives dealers because there are no price feeds whatsoever – it is you against the house.
TRADOLOGIC, one of the largest platform providers in the binary options business, was subject to a similar matter when one of its major shareholders was arrested for money laundering and fraud.
Other major firms in the sector include Banc de Binary, which was subject to an $11 million fine from the CFTC for illegally soliciting US customers despite having been in receipt of a cease and desist order prior to the charges issued against the firm in 2013.
Anyoption, one of the largest brands, is owned and operated by Shay Ben-Asulin, who was charged by the Securities and Exchange Commission in America in 2011 for participating in pump-and-dump schemes and for engaging in a fraudulent scheme to conceal the sales of millions of shares of their companies, netting him and his 7 accomplices $33 million, yet he went on to found a large binary options brand after this, continuing to satisfy his thirst for ripping people off.
Hardly the most salubrious set of people.
FinanceFeeds conducted an investigation with regard to how these firms target potential customers, one brand of SpotOption having explained “We target people who are addicted to gambling. If you have any leads that you can bring, bring them” – this being commonplace whereby binary firms expect recruits to bring leads that they have stolen from their previous employer. The gambling addict target is about right. This particular brand had an online casino, and after taking enough from the gamblers, they would pass the leads to the binary options division and get more deposits on the pretense that the customers shouldn’t gamble, but should invest instead.
The new EUBOA is about as likely to save this back street business from the jaws of the powers that be as Lazarus coming back to life, and the real electronic trading industry should perhaps take heart in that it will soon be in a position not to be associated with the binary options sector, as well it should not be, and that this last ditch attempt is not only ill-fated, but should also be regarded as that by those who really and impartially understand that things have to change for the better in order to preserve the high quality and sophisticated nature of the real OTC derivatives industry, and not to pander to the lowbrow and moribund binary options sector.
FinanceFeeds remains completely committed to its proponency and support of genuine multi-asset electronic trading firms, their respective technology providers, liquidity and prime brokerages and the institutional and established retail sector in quality jurisdictions, who continue to use their sophistication and quality business ethics to move this industry forward.