The financial security commission of Cyprus has finally take care of the case of Cedar Finance, one of the binary options brokers that has been offering traders the ability to speculate in financial markets through binary options. The press release was published in Greek in the official website of the financial regulator the Mediterranean island of Cyprus.
There has been already a first statement against Cedar Finance, this took place on December 19, 2013, and there was a second iteration just a few weeks later, on February 21, 2014. This announcement follows a meeting of the CySEC that took place on June 16 of 2014 where the final withdrawal of the CIF 213/13 license took place, this was when the broker was still allowed legally to offer investment services to traders within Europe. Therefore, the T.B.S.F. Best Strategy Finance Ltd society, which owns the brand Cedar Finance and www.cedarfinance.com website, is no longer a broker officially regulated and authorized in the European Union by the CySEC.
The withdrawal of the license to the broker has been applied because of the numerous offenses committed by this broker, whose practices are contrary to the rules of the CySEC “Investment Services and Activities and Regulated Markets Law”. An example of this can be seen in the last infringement of Cedar Finance confirmed by the authorities; which was an offense against section 26 (5) of the regulations of the CySEC, then it was proposed that services to European traders were to be suspended temporarily on December 19, 2013. However and despite the warning of local financial authorities, the broker continued its activities.
Before the latest statement, Cedar Finance had a three month period to regularize their status with the correspondent authorities in their investment activities through binary options. It seems that the broker has ignored the demands of the financial authorities and continued to offer their services without the CySEC license or any other license from another financial regulator. Therefore, Cedar Finance did not respect the law and posed a significant risk to traders and investors. For these reasons, both the CySEC and financial advisors discourage traders who use the services offered by Cedar Finance and any other broker that is not directed by a regulated and authorized entity.
Unlike Cedar Finance, which no longer has the CySEC license, or any right to offer legal binary options trading in Europe, there are numerous binary options brokers that are regulated and have licenses, permits and other authorizations from different financial institutions that reward their quality of investment services. These regulated binary options brokers do not present any risk to traders. Customers tend to have the protection of banks and financial authorities, so that if any inconsistency occurs, any money invested has certain security and might be recovered with help of the regulative entities.
Among these regulated brokers which offer binary options, it is recommended to choose brokers that belong to the large companies and are known as regulated industry trading brokers. There are twelve European regulators licenses, including licensing from the CySEC (Cyprus / EU), CNMV (Comisión Nacional del Mercado de Valores – Spain), AMF (Autorité des Marchés Financiers – Banco de France), CONSOB (Commissione Nazionale per le Società e la Borsa – Italy) or FCA (Financial Conduct Authority – UK).
iOption has gone bankrupt. Employees have been reporting massive firings, but there has not been much talk coming from official spokesmen in the area. The news were also confirmed by well-established sources within the binary options industry.
The news has taken by surprise traders and binary option analysts, which had a favorable perspective regarding iOption operations. iOption has been reviewed several times, this is because the agency was one of the first brokers to offer binary options for traders to buy or sell. iOption closing its doors meant for market analysts and financial advisers to revise their policies and trading strategies to avoid investing in a broker that might declare bankruptcy at some point.
It is hard to think any evident reasons for a large-name broker to fall in this manner. The first thing that analyst discovered was that for about a month ago, iOption clients were not able to place any sort of trades within the platform. It turns out that in order to comply with new EU regulations, iOption asked its trading platform provider, SpotOption to create some changes to its platform so that will satisfy regulatory requirements. Apparently, the necessary software updates took too long, which caused many problems for existing and new customers. It is a fundamental principle that businesses should never close their doors to clients which are willing to spend money on the company.
In short, the service break which took place for over a month meant the beginning of a constant loss of income for iOption. Second rule every marketer must know is that it must be able to allow a high level of liquidity. Unfortunately for iOption, Netpay and Liberty Reserve, they are all facing bankruptcy. These e-wallet companies are holding thousands of dollars of capital in the accounts iOption had in its platform. And if that was not enough to iOption, several sources have stated that several financial partners of iOption are starting to get upset about the situation of their relation. The newest partner, who has invested six figures in the company, has said that after signing the contract that they have realized the company was not giving off the right impression and that they were presented with false information about the situation of the company. As a result, it was decided to freeze their investments and to prevent the company from using this money. The only alternative left for iOption to manage was to sell their goods. The broker has started negotiations with Bbinary regarding a possible purchase, but it is a cloudy scenario for iOption because of previous commitments from Bbinary in the US. No other binary options broker has had real interest in taking over this catastrophic broker.
It is clear that the demise of Liberty Reserve affected iOption more than it could be handled, in addition to every new problem which drove the company into the decision to close its doors, this can happen in any type business, however this in no way justifies the lack of communication with its customers and lack of payment to its affiliates. It is a fact that iOption will not return in the near future.
There are many brokers and therefore, many traders; so newcomers must consider that they have a lot of brokers at their disposal. But if a trader arbitrarily picks a broker, a big risk is being take. In this case, it is highly possible to choose an unreliable broker which doesn’t have a good relationship with its traders or any sort of guarantee in terms of security of payment and deposit. It is recommended to get acquainted with whichever are the most trusted brokers at the time.
Some of the most trusted brokers are 24Option, OptionBit and OptionFair. They require a minimum deposit of $250, $200 and $250 respectively. Also, all three of them offer demo accounts for newcomers.
If a trader selects one of the brokers recommended above there’s little room for mistake. These brokers have been established for years and have repeatedly shown to be of quality regarding their traders. They can be considered some of the most trustworthy brokers at the time; but just like everything on the binary options market, variables are very volatile and a broker might declare bankruptcy overnight. This is why traders must be aware of any sort of suspicious movement made by their broker. The already-mentioned most trusted brokers have no interest in deceiving customers whatsoever.
It is important to be able to maintain a streak of successful transactions while trading binary options. And that is not possible if a broker offers an awfully bad payment rate. Imagine that the trader receives only 50% return of the trade in their account, and 0% if the option is out of the money. Would it be possible to succeed in trading in this manner in the long run? It is quite obvious that this would not be the case. Traders have to be successful in 70% of their trades just to get even. If, on the other hand, a fair payment of 85% and 0%, things would be much easier if trading is done correctly, also it could generate high payment rates.
Overall, what’s important is that the broker has a good position when compared with other brokers. In this market, traders should not compare, for example, a NASDAQ stock with an EUR / USD stock, it would be just like comparing dogs and cats. If traders want to know how good of a pay the broker is offering, then they should compare EUR / USD on a broker with EUR / USD in another broker.
Customer service is also becoming increasingly important to determine whether a broker is trustworthy or not. In this area, the quality parameters stand in whichever language is available, speed of service and potential helpfulness provided by the customer service employee. There are employees who can solve problems within minutes and there are those who postpone the issue until the customer gets tired. It can also happen that the trader gets a certain amount of emails for several days stating that the problem is being processed, and that the client will be contacted when there’s some progress on the issue.