New rules for binary options brokers from CySEC

In April CySEC clearly spelled out rules for binary options brokers.

Cyprus Commission for the Securities and Exchange Commission issued a new circular, radically changing the rules of the game model of licensed brokers in the binary options sphere. The regulator requires significant changes in the software provided by most brokers of technological solutions in the industry. You can find out more about the most popular and regulated brokers at StockPair review.
Under the new requirements, all manufactured products will have to meet a set of instructions. Customers of binary options on the market should receive adequate information on the contracts offered to them while brokers themselves should conduct their activities in providing "fair treatment of customers." Brokers and suppliers of technological solutions have time to fulfill the demands until mid-July, to adjust to the changes. Binary options with a validity period of 30 seconds do not fit into the new rules.

Transparency - the first in the list of priorities

The Commission has introduced changes after numerous complaints from customers in the European Union to local regulators. As a result of pressure from the European Service for Securities and Financial Markets (ESMA) the Cypriot regulator was forced to intervene and prevent unfair practices in the industry.

In particular, by CySEC has tightened the requirements for underlying assets that are offered to customers for trading. For example, if a client trades crude oil, to be displayed on the platform not only quotations but also the relevant futures contract (for example, WTI Crude Oil May 2016 NYMEX)

Prices of supply / demand and maturity

The second requirement for binary options platforms is connected with the flow of quotes. Brokers need to display a continuous flow of quotes throughout the life of the option. Field with the bid / ask price should be located in plain sight, next to the exercise price of the binary option.

Binary Options Brokers will also have to disclose the methodology for calculating the strike price and publish providers' quotations. At the expiration of binary option the client must be shown a window with a strike price, demand and supply costs, as well as the final price (if available). If prices are rounded, the client also must be informed about it.

Cancelling of a binary option purchase

CySEC gives traders three seconds to change their mind and refuse to buy a binary option if they consider it unjust execution of the proposed price.
If a broker offers customers to purchase an option, it should disclose the methodology of formation conditions of such redemption.