According to their new image, CySEC decided to toughen up, create better trading conditions for traders, increase transparency and warn brokers about some unethical practices that market is already flooded with.
In circular C108, published on January 26th, CySEC introduces a new set of rules regarding changing names of binary brokers. This is one scam practice that happens from time to time among bad brokers. Basically, the company just changes either their own name or brokers name in order to continue with suspicious activities. For example, Company A gets prosecuted for operating binary broker B. After some time, they change their name to Company C. Trader believes that some other, possibly honest company, is running the broker now, and makes a deposit with a scam.
In another case, Company A is owning broker B, but after a fine, changes the brokers name to broker C, and continues to do bad business. For this reason, it is important for traders to always check not only the broker but the company behind them as well.
Such was the case with LBinary broker.
New Rules for Everyone
With the new regulation, this bad practice should be stopped for good. The rules clearly state that the name should obviously reflect the type of business that is conducted by the company or brand. The change may come under special circumstances, but only with CySECs approval:
For purposes of providing accurate information and avoiding possible deception over the investors, and for compliance with the applicable laws and regulations, the Commission neither encourages nor has a positive view of the change of name and/or trade name of the Regulated Entities, other than in exceptional cases, for example in cases of a takeover or merger or when the change of name is made to be in line with the existing trade name of the Regulated Entity. Before starting such a process, the Commission should be notified accordingly.
The paper clearly states that companies who are under investigation or special supervision by CySEC or other authorities are not allowed to change their names either. In case a regulated entity changes name, they must follow the special rule in the following 12 months and write special formulation on all their official materials, documents, correspondence etc. In the formulation, they must state both names, for example, “ABC Ltd, now EFG Ltd”. All rules are implied immediately.
This is another proof how CySEC is turning a new page in regulating binary options and is more dedicated than ever. This decision will definitely improve conditions on the binary market and make trading more safe and protected than in the past.
To avoid trading with scam brokers, make sure to make a deposit with brokers available on Top List.