Earlier this week The Cyprus Securities and Exchange Commission (CySEC) has published a consultation paper proposing various reforms that are aimed to standardize the binary options trading as we know it today. These reforms are going to be add on to the already existing regulatory framework of binary options trading under CySEC jurisdiction.
Why implement changes and what do they include? And will they have any implications for our traders’ strategies in the future? Let’s find out!
CySEC on implementing reforms
Demetra Kalogerou, Chair of CySEC, has stated that the industry as we know it today is eager to grow and improve and CySEC is glad to support these changes. All of the proposed reforms that are being developed are in accord with the current trends and problems.
The new standards that deal with the Digital Options Contract are meant to eliminate the trader concerns regarding its safety and make sure that brokers act in ethical and professional manner.
The Proposed Reforms
The reforms that were proposed by The Cyprus Securities and Exchange Commission include the following:
- Opaque strike pricing removal. Strike prices will be the same for all the users. Floating strike prices will not be permitted;
- Sub-5 minute tenor trades will be banned in order to eliminate shorter-term volatility;
- As a result, the minimum tenor trades will be 5 minutes;
- Prices will be quoted as an evolving bid-ask spread. This will help clearly represent the percentage probability of an outcome occurring.
- CIFs will provide continuous two-way pricing. Traders would not have to wait until the expiration point to exit the position;
- Finally, all algorithms for the calculation of expiration and settlement values will follow CySEC’s methodology. Individual methodologies will not be allowed.
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