Sweden also experiences binary options troubles
Sweden’s Finansinspektionen says binary options brokers from Cyprus and the UK are those most often targeting Swedish clientele.
It will barely be surprising to say that Europe is suffering from binary options fraud. Sweden has become the latest to join the ranks of European nations complaining of a rise in enquiries and complaints about binary options brokers and an increase in losses incurred by clients of these entities.
The trend has been underlined in a report by Sweden’s Finansinspektionen, entitled Consumer Protection on the Financial Market.
Binary options are mentioned amid the top three sources of highest risks for Swedish customers. The regulator notes that in recent years, it has registered a rise in enquiries and complaints from consumers who have suffered significant losses in connection with binary options trading. The situation is exacerbated by aggressive marketing practices often involving social media, Finansinspektionen says in its report. This observation is in tune with findings in a report on manipulative marketing practices used by online trading firms published by France’s financial markets regulator AMF.
A factor that makes oversight of binary options offering in Sweden difficult is the law, which allows treating binary options as securities instruments and a type of gambling too. Most binary options fall under the definition of financial instruments but there are exceptions, the regulator notes. Discerning is difficult and the fact that there are so many kinds of binary options does not help neither the regulators, nor the customers.
In cases where binary options are regarded as financial instruments, the company that offers them must have a license under the securities regulations of Sweden. A foreign investment firm that wants to offer its products to consumers in Sweden must notify FI before starting its business. The regulator stresses that, in Sweden, binary options are sold by a number of companies claiming to be based in the UK and Cyprus. Currently FI is working to contact companies that offer binary options in Sweden, but have not notified FI about their business.
FI says that it may initiate discussions with regulator from another EEA member state where a given binary options firm is regulated in case Swedish investors have complaints about this firm. However, such an approach, which has been applied by France and Belgium has not led to any particular benefits for defrauded investors of companies like Banc de Binary. There have been warnings and instructions that were published months after the binary options firm stopped its activities.
Sweden’s regulator stresses that binary options are an inappropriate product for most consumers. And although it places them amid priority areas for consumer protection, FI mentions no particular plans on bringing this type of fraud to a halt.