In fact, it is easier to get regulation from the CySEC than from the German BaFin or the British FCA, for example. But this is primarily due to monetary reasons and not because the CySEC is not really strict.
For a long time, the regulatory authority was even ridiculed because regulations were monitored rather loosely and violations of conditions were not or only minimally sanctioned, But in the meantime, the Cypriot regulatory authority has been making more and more talk of punishments.
To this day, Cyprus has been the ideal place for Forex brokers and binary options brokers. The regulator's requirements were easy to follow and many brokers were regulated in Cyprus due to this fact. However, one important aspect has always been left out: No other regulatory authority has any experience with the supervision and monitoring of brokers for binary options. Since last year, however, the CySEC has tightened its reins somewhat and imposed the first substantial fines. Payments of customer funds, support and the treatment of customers in general were viewed particularly critically. It has also often been criticized that customer requests have been poorly implemented or have received no attention at all.
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The path of the CySEC
Even if the CySEC had already done so has started regulating brokers a few years ago, so it is only when we look at the recent past that it becomes clear that the authority is actually taking action. The first penalties were imposed on brokers for binary options in 2015. But the very young year 2016 makes it clear that the hard crackdown by the regulatory authority should not remain a flash in the pan.
A new case of punitive payments is making headlines these days. Rodeler Limited, a company that also owns the broker 24Option, was recently sentenced to pay a penalty of € 156,000.
If you know the scene, these two punishments will not be the last in the year 2016. It has already leaked that the financial regulator is already keeping an eye on other companies. It would come as no surprise if the penalties were similar. This has proven the Cypriot regulator to be more than just a toothless tiger.
The role of financial regulators
There are so-called financial regulators in almost every country. The purpose of these regulations is to monitor the processing of financial transactions. In this way, you provide at least a minimum level of security for customers of financial service providers. How strict a regulatory authority really is can only be seen when it has acted against a bank or broker. Just like with a concluded insurance policy, the benefits can only be recognized when a claim has occurred. Just because the Cypriot regulatory authority has not yet appeared does not mean that this authority is not strict. Because regulators often work in secret. Test results rarely come to the public. Often you only find out when press releases about particularly high penalties are published.
While stock exchange trading was previously reserved for certain people only, thanks to online trading it is possible for almost every private person to do financial transactions. In order to meet the high demand, more and more online brokers have emerged in recent years. Great importance is attached to the transparent design of the trading conditions of the individual brokers, with the focus on the protection of customers and the main task of the financial supervisory authorities.
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Trade only with regulated brokers
A good tip that we always give our readers on the way is the note that you should only trade with regulated brokers. As the penalties described in the previous paragraphs have shown, this does not mean 100% certainty, but it does make it clear that at least one authority has an eye on the processing of transactions. In return, the brokers know that they are under observation.
You can find an overview of regulated brokers in our broker comparison for binary options. A broker that we would like to recommend to you is the broker IQ Option. This convinces with good trading conditions and minimum trading amounts from 1 € per binary option. A low minimum deposit of just € 10 or $ 10 will convince you with high returns. The broker maintains German support and is of course regulated by the Cypriot financial regulator.