The CySEC (Cyprus Securities and Exchange Commission), which is the main regulator of financial markets across Europe and whose principal missions is the supervision of binary options brokers in the trading industry in addition to other financial entities, has just published an official statement on its website in order to keep traders and investors informed that a request for a CIF CySEC license had just been denied by the regulator. The binary options broker ShortOption (which hides behind the company Stardor Limited) had previously filled an application with the authorities of Cyprus to get the golden ticket, however it turns out that the broker does not appear to meet the criteria required by the CySEC. Hence, the regulator has decided to deny the license application filed by the broker. Although the CySEC has first refused this application to grant the license in December 31st 2013, the official announcement was published only a few days ago. The delay in publishing the CySEC’s decision to the general public is very certainly due to the end of year holidays. There are also additional steps that the regulator must take with regards to the candidate broker for the purpose of obtaining further information with respect to its situation as we shall see here-below.
Given the official statement of the CySEC, it would appear that the main problem linked to the non-issuance of a license to the ShortOption broker is directly related to the principle shareholder of the company Stardor Limited. The regulator has apparently not been able to obtain sufficiently clear information about such shareholder and establish his true identity; the regulator would like to know the facts about this shareholder who has full authority over the company and the broker given that we are talking here about providing services in terms of investment to thousands of traders; this rule that the regulator imposes on binary options brokers which apply in order to obtain its license appears in the “services of investment activities and financial markets” legislation drafted in 2007, section 6. Due to its failure to provide such information to the Commission, the ShortOption broker has consequently and logically seen its application denied by the authorities.
If we go back to Section 12 and Section 13 of the same statute related to the activities on the financial markets, we shall note that each broker that applies for a license must provide the regulator with certain supporting documents that will allow it to see the skills of the broker’s staff, such as diplomas and certificates in finance or CVs demonstrating their professional experience in this industry. A detailed section (section 3) of this piece of legislation fully addresses the required investment-related qualifications and the official documents that the brokers are required to provide to the regulator in their license application; hence, it would seem that ShortOption has overlooked this point.
The brokers such as ShortOption that refuse full cooperation with regulators or that have seen their license applications denied for other reasons are binary options brokers to avoid; many brokers are sanctioned by the regulator because companies rarely meet the criteria of regulation and consequently present a potential risk to traders. Also, with these ill-intentioned companies, traders are not immune to scams in binary options. To have a good experience in the markets through binary options, it is necessary to choose a regulated and licensed binary options broker with a proven track over the long term by having received the approval and license from multiple regulators in the financial markets such as the CySEC or the FCA. For example, the TopOption broker has more than 10 licenses from international regulators.
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