Leverate, the well-known Forex Software provider decided last week that it will no longer be offering its Binary Options Platform. The BX8 platform was only released back in 2014 when the prospects for Binary Options Trading popularity and growth in the sector looked much better.
The past two years has seen 2 major European countries ban the products mostly as a result of abuses by some of the Binary Options Brokers. France has instituted a ban on advertising and Belgium has issued an all-out ban of both Binary Options and Forex. It looks as though the binary options industry’s short-term outlook could jeopardize its future altogether. It will be highly likely that in the coming year we will see more regulatory action against Binary Options Brokers.
The negative press has already had an impact on the industry and we see this in the recent move by Leverate. There are only a handful of technology firms in a now crowded binary space. SpotOption which was first to market has established a solid foothold and will most likely maintain market dominance. The question remains if they will be able to expand a marketplace that is shirking due to increased regulations.
Binary Options is also dealing with an image problem. Many Forex Brokers are now hesitant in offering Binary Options because of the recent negative press. There is also the risk of Binary Options being reclassified with some regulators. It is possible that Binary Options might lose its classification as a financial product and move to being a gaming product. If this were to happen this would hurt any chance of Binary Options gaining any level of acceptance. This could also lead to a further drop in binary options trading popularity.
Binary Options Brokers need to change the way operate. They need to change their compensation structure to their employees from a net deposit and P&L one to a more industry acceptable standard. This action would limit the high-pressure sales tactics that have led to many of the complaints.
CySEC the main European Binary Options regulator will look at these issues and others but the fear is that they have acted too late.
Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary