CFTC’s Action Against Unregistered Binary Option Platforms
Calvin what on earth are you saying?
Mtdarkness82
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Moka, youre going to have to reread my posts cause I never stated that they are regulated by CySEC. Never once did I say that. I said they are in the process of regulation. I said that while they are in the process of that, they have to be in compliance with CySEC regulations.
Also, I have done much research into vanilla options after you mentioned it. However you want to slice it, that is absolutely nothing like binary and doesn't even compare. It's more akin to regular trading than anything. Not a bad way to go if you are wanting to trade stocks but don't have the capital. If a person is looking for the simplest, fastest and most profitable method of trading, it is still binary options.
I think I'll stick with what I'm doing. I've already withdrawn my original deposit so I am trading with no risk to myself anyways. I may yet develop a strategy that works with Nadex instead of keeping my money overseas, but in the mean time, what I'm doing works and while I wouldn't recommend sending $50k to some unknown, unregulated broker, I would still recommend binary options to anyone who likes to trade fast and has a good strategy. Even in the current condition that binary options are in across the world.
Also, I have done much research into vanilla options after you mentioned it. However you want to slice it, that is absolutely nothing like binary and doesn't even compare. It's more akin to regular trading than anything. Not a bad way to go if you are wanting to trade stocks but don't have the capital. If a person is looking for the simplest, fastest and most profitable method of trading, it is still binary options.
I think I'll stick with what I'm doing. I've already withdrawn my original deposit so I am trading with no risk to myself anyways. I may yet develop a strategy that works with Nadex instead of keeping my money overseas, but in the mean time, what I'm doing works and while I wouldn't recommend sending $50k to some unknown, unregulated broker, I would still recommend binary options to anyone who likes to trade fast and has a good strategy. Even in the current condition that binary options are in across the world.
Can you give me an example how "However you want to slice it, that is absolutely nothing like binary and doesn't even compare"
I was refering to Option Spread not just individual option
+ the security of funds etc via SIPC coverge
Why would any body bother with all these unregulated brokers even with $500
Mtdarkness82
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Your examples weren't option spreads, but vanilla options though you did mention spreads. And why would anyone bother? Cause of the potential. I have made over $3500 in 2 weeks with a $200 deposit. That's not typical, I know, but thats what has happened. I have yet to see any other asset that can compare to the success I have seen so far. And I never risk more than 5% per trade. Well, except at first because the minimum trade is $20.
Let me pause real quick and say that I don't want people thinking that this is easy money or that any regular joe off the street can make money like that, cause I have been in the business of FX for a very long time, so I an familiar with the way the markets move and how to use indicators and price action. That being said, I doubt people will make returns like that, but still, the potential is there.
Options still require the market to move X pips/points in order to make a decent return. Many options setup in increments of 2-3%, so in order to make any money, you have a minimum that the market must move before any return is generated. Binary Options? I make 70-87% of my risked investment even on the difference of .1 pips. Thats a very big difference. Moreso, I can do this on a 5 minute timeframe with binary options so the potential to take more than 15 trades per day which makes a very big difference. And since Nadex is the only binary options exchange out there that is regulated, my options are Nadex or someone unregulated. Personally, I chose someone that is applying for regulation for the better time frames and at least a small measure of security knowing that as long as they are trying to get CySEC's license, they are going to try to be legit. And you know what would happen if that broker crashed and burned today? You know what I would lose? Nothing. And since that event isn't likely any time soon, I'll continue to trade and withdraw money. I don't know what your problem is with it, to be honest. It's not like anyone is asking you to do it or even be ok with it. I just think that, just because someone is regulated doesn't make them legit, and just because someone isn't regulated (yet) doesn't make them a crook.
And I'm not the only one. So those like me will continue to try and capitalize on these opportunities, and people like you will continue to likely believe we are fools. I actually have no problem with this scenario. Its not for everyone, though, and I hope your options or whatever you do makes you plenty of money.
Let me pause real quick and say that I don't want people thinking that this is easy money or that any regular joe off the street can make money like that, cause I have been in the business of FX for a very long time, so I an familiar with the way the markets move and how to use indicators and price action. That being said, I doubt people will make returns like that, but still, the potential is there.
Options still require the market to move X pips/points in order to make a decent return. Many options setup in increments of 2-3%, so in order to make any money, you have a minimum that the market must move before any return is generated. Binary Options? I make 70-87% of my risked investment even on the difference of .1 pips. Thats a very big difference. Moreso, I can do this on a 5 minute timeframe with binary options so the potential to take more than 15 trades per day which makes a very big difference. And since Nadex is the only binary options exchange out there that is regulated, my options are Nadex or someone unregulated. Personally, I chose someone that is applying for regulation for the better time frames and at least a small measure of security knowing that as long as they are trying to get CySEC's license, they are going to try to be legit. And you know what would happen if that broker crashed and burned today? You know what I would lose? Nothing. And since that event isn't likely any time soon, I'll continue to trade and withdraw money. I don't know what your problem is with it, to be honest. It's not like anyone is asking you to do it or even be ok with it. I just think that, just because someone is regulated doesn't make them legit, and just because someone isn't regulated (yet) doesn't make them a crook.
And I'm not the only one. So those like me will continue to try and capitalize on these opportunities, and people like you will continue to likely believe we are fools. I actually have no problem with this scenario. Its not for everyone, though, and I hope your options or whatever you do makes you plenty of money.
Your money your risk what do I care mate (If "they are trying to get CySEC's license" is good enough for you I have nothing to say! LOL
Hell may be I shoudl start a business like this and say "Yah sure I am trying to get approved by SEC/CFTC, ASIC, FSA so Trust me!)
In Australia for example ( and sure it is same in UK and USA) ONE CAN'T OFFER FINANCIAL PRODUCT WHILE "TRYING TO GET ASIC LICENSE" ONE HAS TO GET IT FIRST...... kapish!
I always said that the product is attractive .. however people out there promoting this wihout loking at other risks...or worst hiding these risks is what worries me
one should consider Counterparty risk etc
but any way you risk your own money just don't tell that there is no diff in risk profile between Exchange Traded products which are traded on major global exchanges with thousands of counterparties and these Cyprus based OTC products! C'mon you know better
Simple fact Using Vanila Options spreads to build BO type payout gives SIPC protection...
If you are interested in FACTS
once again show me how on earth BO is better in following ascpects
- SIPC or similar client money protection insurance?
- Conflict of interest with investor ( Market Maker or True Exchange.)
- Robust requirments for broker to enter teh market?
- Variety of products
I agree that BO is better than ETO Spreads in following matter
- Short expiary
- Easier platform
Hell may be I shoudl start a business like this and say "Yah sure I am trying to get approved by SEC/CFTC, ASIC, FSA so Trust me!)
In Australia for example ( and sure it is same in UK and USA) ONE CAN'T OFFER FINANCIAL PRODUCT WHILE "TRYING TO GET ASIC LICENSE" ONE HAS TO GET IT FIRST...... kapish!
I always said that the product is attractive .. however people out there promoting this wihout loking at other risks...or worst hiding these risks is what worries me
one should consider Counterparty risk etc
but any way you risk your own money just don't tell that there is no diff in risk profile between Exchange Traded products which are traded on major global exchanges with thousands of counterparties and these Cyprus based OTC products! C'mon you know better
Simple fact Using Vanila Options spreads to build BO type payout gives SIPC protection...
If you are interested in FACTS
once again show me how on earth BO is better in following ascpects
- SIPC or similar client money protection insurance?
- Conflict of interest with investor ( Market Maker or True Exchange.)
- Robust requirments for broker to enter teh market?
- Variety of products
I agree that BO is better than ETO Spreads in following matter
- Short expiary
- Easier platform
Mtdarkness82
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Just read about options spreads. Very interesting if you feel that a 2.5% or more price change is about to occur. And since we are talking about options here, forex isn't an option to trade. It can limit your losses, and that's cool, but that's as far as the similarities go, especially since you have specific strike prices that need to be met before you can make max profit with spreads.
Variety of products? Every broker is different, but most BO brokers offer a variety of stocks, indices, and commodities as well as forex. Forex is where I make my money. Your spreads don't cover that one, unfortunately, though I can certainly look into spot currency future options, though that looks to be a pain in the ass. I may look into spreads though, as they look like fun and I can limit my risk. As far as conflict of interest goes, we have already been down that road and I'm not bringing that back up.
The rest? Well, I'll give you SIPC and "robust requirements for brokers" whatever you mean by that cause there is still so much to be done when it comes to weeding out the majority of BO scammers out there.
But that's just it. Each market has their strengths and weaknesses, and I'm certainly not pimping BO's as the best thing ever, especially since the regulatory infrastructure is still under construction around the globe. It just happens to be my favorite.
EDIT:
Just looked into spot currency futures options. Quite similar to binary options with the spreads being about 5 pips and a limited risk to reward ratio of 1:1 which is actually better than what you get for binary options and no expiry so you could just hold it till you won (or the contract expired, though that is unlikely). I will continue to look into this.
Variety of products? Every broker is different, but most BO brokers offer a variety of stocks, indices, and commodities as well as forex. Forex is where I make my money. Your spreads don't cover that one, unfortunately, though I can certainly look into spot currency future options, though that looks to be a pain in the ass. I may look into spreads though, as they look like fun and I can limit my risk. As far as conflict of interest goes, we have already been down that road and I'm not bringing that back up.
The rest? Well, I'll give you SIPC and "robust requirements for brokers" whatever you mean by that cause there is still so much to be done when it comes to weeding out the majority of BO scammers out there.
But that's just it. Each market has their strengths and weaknesses, and I'm certainly not pimping BO's as the best thing ever, especially since the regulatory infrastructure is still under construction around the globe. It just happens to be my favorite.
EDIT:
Just looked into spot currency futures options. Quite similar to binary options with the spreads being about 5 pips and a limited risk to reward ratio of 1:1 which is actually better than what you get for binary options and no expiry so you could just hold it till you won (or the contract expired, though that is unlikely). I will continue to look into this.
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Why are you comapring just individual option with BO
I am talking about Option Spreads which mimic Binary ( and the option you use could be on
Euity/ ETF/Futures ( Index(Spot and Future) , Currency)
If say DJX is 131
You are bullish so you buy a CALL SPREAD of say 131/132 meaning you purchase a 131 CALL option and at same time you sell a 132 CALL option same expiary. Thisis traded as single spread on the exchange not indivudual Option
SO your Risk reward is like this
Say you purchase this SPREAD at 0.40 = $40
Max risk = Premium paid = $40
Max Reward = 100-40 = $60
Fixed risk Fixed reward
Does thsi not what Binary is it either settles at 0 or 100 same here
If you agree with this
Then if you count options available on so many things on major exchanges like CME, NYSE, LSE,ASX etc are you seriously saying that these $ Binary brokers offer same variety!
+ FUNDAMENTAL issue of counterparty risk and the broker acting a Market maker how can you ignore that?
"robust requirements for brokers" means $2 comapny can't get in to thsi business which is better for consumer
Mate as I said it is your money you can risk it Zanzibar island what do I care but on one hand you say youy are ok with BdB becasue they claim that "They are applying for CYSEC regulation" and on other hand say "the regulatory infrastructure is still under construction around the globe"
Would you go to a Dentist who is " in the process of applying for dental practise"
Would you go to a And Architect or a Civil Engg who are "in the process of applying for appropriate licences!
My god what logic is there !
You may not be pimping these products per say but neither are you open about the various additional risks that any investor MUST consider and made aware of! UPFRONT
A sexy looking platform is one thing a open and transparent product is another
For exampel even slightly better regulated BO like IG and now Vantage in Australia when I asked please define your underlying meaning if we have a dispute on the CFD or a Binary based on say S&P 500 Is it based on teh "Official" closing of TRUE Exchange offical price and is it based upon Spot or Futures
the answer (after lot of digging) is "Oh it is similar... not guranteed that it would be same as official price"
SO if S&P 500 closes at xyz
THERE SI no bloddy gurantee that your broker is going to honour that he is going to say my closing price ( on which teh outcoem of the Binary settlment is based) is a Offical price + soem fair value...
SO there you go the ambiguity...
Why bother when on a true exchange using ETO to build a spread you get all that is vercy clear
You are not at mercy of a broker
I mean if IG or Vantage so called regulated brokers of OTC are going to be like this what chance you have with a Cyprus based $2 broker! who is "Trying / in process of getting CySEC!)
May be you wil realsie the danger after some broker runs with your hard earned money
We should be striving for true open but level playing field not promoting these dodgy schemes to say the list
OMG
I am talking about Option Spreads which mimic Binary ( and the option you use could be on
Euity/ ETF/Futures ( Index(Spot and Future) , Currency)
If say DJX is 131
You are bullish so you buy a CALL SPREAD of say 131/132 meaning you purchase a 131 CALL option and at same time you sell a 132 CALL option same expiary. Thisis traded as single spread on the exchange not indivudual Option
SO your Risk reward is like this
Say you purchase this SPREAD at 0.40 = $40
Max risk = Premium paid = $40
Max Reward = 100-40 = $60
Fixed risk Fixed reward
Does thsi not what Binary is it either settles at 0 or 100 same here
If you agree with this
Then if you count options available on so many things on major exchanges like CME, NYSE, LSE,ASX etc are you seriously saying that these $ Binary brokers offer same variety!
+ FUNDAMENTAL issue of counterparty risk and the broker acting a Market maker how can you ignore that?
"robust requirements for brokers" means $2 comapny can't get in to thsi business which is better for consumer
Mate as I said it is your money you can risk it Zanzibar island what do I care but on one hand you say youy are ok with BdB becasue they claim that "They are applying for CYSEC regulation" and on other hand say "the regulatory infrastructure is still under construction around the globe"
Would you go to a Dentist who is " in the process of applying for dental practise"
Would you go to a And Architect or a Civil Engg who are "in the process of applying for appropriate licences!
My god what logic is there !
You may not be pimping these products per say but neither are you open about the various additional risks that any investor MUST consider and made aware of! UPFRONT
A sexy looking platform is one thing a open and transparent product is another
For exampel even slightly better regulated BO like IG and now Vantage in Australia when I asked please define your underlying meaning if we have a dispute on the CFD or a Binary based on say S&P 500 Is it based on teh "Official" closing of TRUE Exchange offical price and is it based upon Spot or Futures
the answer (after lot of digging) is "Oh it is similar... not guranteed that it would be same as official price"
SO if S&P 500 closes at xyz
THERE SI no bloddy gurantee that your broker is going to honour that he is going to say my closing price ( on which teh outcoem of the Binary settlment is based) is a Offical price + soem fair value...
SO there you go the ambiguity...
Why bother when on a true exchange using ETO to build a spread you get all that is vercy clear
You are not at mercy of a broker
I mean if IG or Vantage so called regulated brokers of OTC are going to be like this what chance you have with a Cyprus based $2 broker! who is "Trying / in process of getting CySEC!)
May be you wil realsie the danger after some broker runs with your hard earned money
We should be striving for true open but level playing field not promoting these dodgy schemes to say the list
OMG
Mirandawilson
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Very, little I know but sounds like you are right. With such act any investor would think over and over again.....
Mtdarkness82
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Wow, I completely forgot about this thread. After Moka's accusations and mudslinging about my so called "ambiguity" after trying to consistently have a decent and polite conversation, I just decided not to talk anymore. No point in trying to have a real conversation with someone that isn't listening. The make ridiculous points, and when you shoot those points down, they start grasping at straws.
But to be honest, keep thinking what you want to think, and I'll keep making money. I've pulled out several thousand dollars (after blowing my first account, lol) from my binary options account located in Cyprus. That is money that has been confirmed and sent to my bank. Money in my pocket. My total earnings are nearing $10k and I have no intention of stopping. In the next couple of months, I'll likely be doing this full time.
So you guys keep thinking that binary options outside the US is a bad idea. I'm not here to change that. Good luck trading whatever it is you guys actually trade.
For those not closed-minded, feel free to start a small account (Many let you start with $200), but make sure you have a good strategy that you have tested on a demo account before risking real money, just like any other trading asset. It is not illegal for US clients to start any kind of account overseas, including binary options, and as long as you claim the income on your taxes and report to the IRS any overseas accounts over $10k, you're doing all the good. Just do your due diligence in researching the company first because there are some frauds out there.
Edit: Moka, I checked into vanilla options and into vertical option spreads. I have actually started including these into what I normally trade (paper trading currently, of course), but to be honest, there really is no comparison to that and binary options. There is no replacement for them. As I said, though, feel free to stay out of them though. I don't plan to.
But to be honest, keep thinking what you want to think, and I'll keep making money. I've pulled out several thousand dollars (after blowing my first account, lol) from my binary options account located in Cyprus. That is money that has been confirmed and sent to my bank. Money in my pocket. My total earnings are nearing $10k and I have no intention of stopping. In the next couple of months, I'll likely be doing this full time.
So you guys keep thinking that binary options outside the US is a bad idea. I'm not here to change that. Good luck trading whatever it is you guys actually trade.
For those not closed-minded, feel free to start a small account (Many let you start with $200), but make sure you have a good strategy that you have tested on a demo account before risking real money, just like any other trading asset. It is not illegal for US clients to start any kind of account overseas, including binary options, and as long as you claim the income on your taxes and report to the IRS any overseas accounts over $10k, you're doing all the good. Just do your due diligence in researching the company first because there are some frauds out there.
Edit: Moka, I checked into vanilla options and into vertical option spreads. I have actually started including these into what I normally trade (paper trading currently, of course), but to be honest, there really is no comparison to that and binary options. There is no replacement for them. As I said, though, feel free to stay out of them though. I don't plan to.
It is not a question of close mindedness mate it is about facts and Consumer protection
The only good thing about Binary is Quick turn around , short than a horse race even)
Apart from that why bother with product where there is clear cut conflict of interest with the product provider, Non transparency of market and even the definition of some of the assets" is bit fishy ( check the definition of Index BO even so called reputable people like IG/ Nadex define it as Exchange Future price + "Fair Value" and that "fair value" is completely at the discretion of the broker
So it is like a Bookmaker saying to you if horse A wins in real life I ( the bookmaker) may decide that Horse B has won so you loose the bet!
How stupid is that?
All you BO promoters go on about
- CFTC bashing and I got my money back so it is OK for this to be unregulated
But never answer the real questions.
Compare apples to apples
Many even don;t know that Vanilla Option spreads can be used instead of these BOs
Don;t get me wrong I am not against the product ( hell if people which to gamble every 60 sec I don;t care)
My point has always being about a product being "True Exchange Traded" and "Client money safety"
M
The only good thing about Binary is Quick turn around , short than a horse race even)
Apart from that why bother with product where there is clear cut conflict of interest with the product provider, Non transparency of market and even the definition of some of the assets" is bit fishy ( check the definition of Index BO even so called reputable people like IG/ Nadex define it as Exchange Future price + "Fair Value" and that "fair value" is completely at the discretion of the broker
So it is like a Bookmaker saying to you if horse A wins in real life I ( the bookmaker) may decide that Horse B has won so you loose the bet!
How stupid is that?
All you BO promoters go on about
- CFTC bashing and I got my money back so it is OK for this to be unregulated
But never answer the real questions.
Compare apples to apples
Many even don;t know that Vanilla Option spreads can be used instead of these BOs
Don;t get me wrong I am not against the product ( hell if people which to gamble every 60 sec I don;t care)
My point has always being about a product being "True Exchange Traded" and "Client money safety"
M
It is not a question of close mindedness mate it is about facts and comparing apples to apples
The only good thing about Binary is Quick turn around , short than a horse race even)
Apart from that why bother with product where there is clear cut conflict of interest with the product provider, Non transparency of market and even the definition of some of the "assets" is bit fishy ( check the definition of Index BO even so called reputable people like IG/ Nadex define it as Exchange Future price + "Fair Value" and that "fair value" is completely at the discretion of the broker
So it is like a Bookmaker saying to you if horse A wins in real life I ( the bookmaker) may decide that Horse B has won so you loose the bet!
How stupid is that? would you bet with such a n bookmaker!
All you BO promoters go on about
- CFTC bashing and "I got my money back so it is OK for this to be unregulated"
But never answer the real questions.
Compare apples to apples
Many even don;t know that Vanilla Option spreads can be used instead of these BOs
Don;t get me wrong I am not against the product concept ( hell if people which to gamble every 60 sec I don;t care)
My point has always being about a product being "True Exchange Traded" and "Client money safety"
M
The only good thing about Binary is Quick turn around , short than a horse race even)
Apart from that why bother with product where there is clear cut conflict of interest with the product provider, Non transparency of market and even the definition of some of the "assets" is bit fishy ( check the definition of Index BO even so called reputable people like IG/ Nadex define it as Exchange Future price + "Fair Value" and that "fair value" is completely at the discretion of the broker
So it is like a Bookmaker saying to you if horse A wins in real life I ( the bookmaker) may decide that Horse B has won so you loose the bet!
How stupid is that? would you bet with such a n bookmaker!
All you BO promoters go on about
- CFTC bashing and "I got my money back so it is OK for this to be unregulated"
But never answer the real questions.
Compare apples to apples
Many even don;t know that Vanilla Option spreads can be used instead of these BOs
Don;t get me wrong I am not against the product concept ( hell if people which to gamble every 60 sec I don;t care)
My point has always being about a product being "True Exchange Traded" and "Client money safety"
M
Mtdarkness82
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Actually, it really is about closed mindedness. There is no apples to apples comparison. That's a cop out and you know it. What are you going to compare binary options to? IIRC, you're the one who brought up vanilla options and spreads. If binary options are apples, Vanilla option spreads definitely ain't apples, so maybe you should heed your own advice about comparing apples to apples before you dish it out to others.
I have listed enough points through this whole conversation. I could literally reply to your entire previous post with quotes from my previous posts. Seriously.
And when I respond to your objections against binary options with the truth of what is really going on, it's suddenly "Well, that's what you say, but I don't see any proof." Closed-mindedness. I'm the one trading binary options for real. I'm the one with my ear to what is going on with the CySEC, the CFTC, etc. If you want proof, then all you gotta do is type in Google and search for yourself. You change your point over and over and keep circling this entire conversation.
And you keep saying that this is about "consumer protection" and all that. Wrong. It's about consumer protection TO YOU. I'm sure there are others that feel the same way, that want their big strong government to protect them, but there are many people here that, like me, believe that watchdog and review sites are more effective and efficient when picking out scams than any government agency will ever be. Beyond that, anyone can screw you, CFTC regulated or not. And you think you're going to see your money returned? Ask foremer MF Global customers where their money is.
Your horse race analogy is ridiculous. The majority of binary options brokers have what is becoming the standardized method of calculating binary options: Bid + Ask /2 or Bid + Ask + Last /3 in the case of stocks. And do they tell you who their feed is coming from? YES. Most of them use Reuters feeds. You just can't get more transparent than that. NADEX may use "fair value", but that's the first time I've heard of it and I have dealt with them directly, not read something off of a web page. Having said that, NADEX IS regulated by the CFTC, so you're kinda sending out mixed signals regarding what is ok and what ain't. Furthermore, NADEX IS a true exchange. They charge commissions to set up the trades and have a 3rd party MM to provide liquidity. None of the Cyprus based companies that I have dealt with use this "fair value" concept. They use a direct formula for their calculations.
True Exchange Traded? Now I understand where you're coming from. This has been the long-term goal of the CFTC and SEC regarding pretty much every asset, specifically forex and binary options. No wonder you are so protective of them. I don't disagree that if Forex were traded on a true exchange, it would make certain things easier and more reliable, specially those involved with volume spread analysis.
But answer me this- What protection did the CFTC or SEC provide MF Global's customers? Who is going to replace the $700 million missing client funds now that MF Global is shut down? MF Global owes a total of 2.2 billion in unsecured claims. And what is the supposed pay out to cutsomers so far? 13-38%, and JP Morgan will be getting a large chunk of that since they were MF GLobal's lender. And that happened here, in the USA where all your wonderful government protection is supposed to be. When it really mattered, where was it? Why didn't your championed government agencies protect those people? They were regulated. And the CEO has yet to face any criminal charges regarding this misappropriation of client funds so far. And I ask again, where is the protection? Once you get done looking up that, research another futures company that did the same thing: Peregrine.
And what's my point with all this? You claim to care about Consumer protection. Believe it or not, I do too. I, and many others, however, claim that there really is no such thing. You risk your money as soon as it leaves your hand no matter where it goes or who it goes to and no matter what government agencies are in place. You wanna know about a specific company? Ask around. Will they take your money one day? Maybe. But this is true no matter where your money is. MF Global and Peregrine just proved that.
So if you have some new info, feel free to bring it to the table.
Mt darkness 82
First of all you keep referring to CFTC and MFG... I never said that CFTC regulations protects Client money 100% in case of broker going burst I REFER TO SIPC INSURANCE WHICH COVER CLIENTS OF US STOCK AND OPTIONS BROKERS Get that first and hence the ref to Vanila Options spreads giving you similar risk reward to Binary .
SIPC - Investor Protection
"Investments protected by SIPC. The cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm are protected by SIPC. Among the investments that are ineligible for SIPC protections are commodity futures contracts (unless in portfolio margining accounts and defined as customer property under the Securities Investor Protection Act), fixed annuity contracts, and currency, as well as investment contracts (such as limited partnerships) that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933"
All I said was from a consumer point of view "Something is better than nothing " hence the CFTC mention, This covers all Futures and OTC FX market so I agree CFTC/ ASIC does not protect client money it just may keep complete scruples away that’s all
The only Protection is
SIPC and perhaps FSA in UK and ASX participants brokers
So I hope the Binary products becomes more main stream and big True exchanges whose broker are likely to be covered under SIPC
I am not close minded I have already said many times that BOs have a certain appeal , easy platform etc
On the other hand you seem to have nothing but keep saying "Big brother govt xxx" some sort
of ideological stance.
I based my observations after seeing how a broker went burst with 47 million $ of client money
Because he was an OTC broker and not a a ASX exchange participant hence NO protection to client money/ and I do not work for any such brokers I was just on the creditor's committee
SO if even CFTC and supposedly good governed Australian ASIC can't protect client of OTC providers what chance these other small jurisdictions have?
and people like you want small and med investors to ignore these risks! because the BO product looks sexy! LOL
Guys spend some time and learn what an Option Spread can offer you over BO and look at obvious dangers of OTC and then risk you money don't fall for marketing hype
Have you ever wondered why there are hundreds if not thousands of these BOs mushrooming everyday...and where all this is going to lead?
It will either make the major exchanges come up with a similar attractive alternative or
Thousands will loose the money in many scams
First of all you keep referring to CFTC and MFG... I never said that CFTC regulations protects Client money 100% in case of broker going burst I REFER TO SIPC INSURANCE WHICH COVER CLIENTS OF US STOCK AND OPTIONS BROKERS Get that first and hence the ref to Vanila Options spreads giving you similar risk reward to Binary .
SIPC - Investor Protection
"Investments protected by SIPC. The cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm are protected by SIPC. Among the investments that are ineligible for SIPC protections are commodity futures contracts (unless in portfolio margining accounts and defined as customer property under the Securities Investor Protection Act), fixed annuity contracts, and currency, as well as investment contracts (such as limited partnerships) that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933"
All I said was from a consumer point of view "Something is better than nothing " hence the CFTC mention, This covers all Futures and OTC FX market so I agree CFTC/ ASIC does not protect client money it just may keep complete scruples away that’s all
The only Protection is
SIPC and perhaps FSA in UK and ASX participants brokers
So I hope the Binary products becomes more main stream and big True exchanges whose broker are likely to be covered under SIPC
I am not close minded I have already said many times that BOs have a certain appeal , easy platform etc
On the other hand you seem to have nothing but keep saying "Big brother govt xxx" some sort
of ideological stance.
I based my observations after seeing how a broker went burst with 47 million $ of client money
Because he was an OTC broker and not a a ASX exchange participant hence NO protection to client money/ and I do not work for any such brokers I was just on the creditor's committee
SO if even CFTC and supposedly good governed Australian ASIC can't protect client of OTC providers what chance these other small jurisdictions have?
and people like you want small and med investors to ignore these risks! because the BO product looks sexy! LOL
Guys spend some time and learn what an Option Spread can offer you over BO and look at obvious dangers of OTC and then risk you money don't fall for marketing hype
Have you ever wondered why there are hundreds if not thousands of these BOs mushrooming everyday...and where all this is going to lead?
It will either make the major exchanges come up with a similar attractive alternative or
Thousands will loose the money in many scams
Mtdarkness82
Junior member
- Messages
- 14
- Likes
- 2
1. It's not an ideological stance that people try to use their government to protect them from things they should be responsible for themselves. It is ideological that people like me believe that a more responsible investment culture, not more regulation and control by the government, is the way to a more stable and healthy marketplace, no matter what the asset. It's ideological that I say, "It's your money, YOU be responsible for keeping it safe." So sue me. It's as ideological as "Something is better than nothing." This entire conversation is ideological cause they are formed of opinions. There are facts that support both opinions, but that is all they are. Opinions.
2. I mention MF Global cause you still aren't getting it- They didn't go bust, they scammed their clients. You seem to overlook that.
3. SIPC Insurance is great and all, but that covers Stocks and Options. Futures traders and forex traders aren't covered. By your own logic, futures and forex and everything else not covered by SIPC insurance is too dangerous and should be avoided. That's ridiculous.
4. Something IS better than nothing, but we seem to disagree that there is a point that something can become TOO MUCH.
5. You mistakenly talk about how I and people like me want small and medium investors to take a chance. Get something strait- I AM A SMALL INVESTOR. There is no separation there. I don't work for anyone other than myself, I'm not here promoting some product, and I certainly don't get paid when anyone takes a chance and deposits money anywhere overseas. I am in the trenches trading with everyone else. I trade live accounts with real money. My money. And some of that money is in Binary Options. And people like you are busy chewing your nails and afraid, you think to make others afraid based on your own concerns. I am simply here to provide the counterpoint and encourage others like myself to think for themselves.
6. I don't want small and medium investors to ignore ANY risk. I am merely saying that, as a small investor, I know the ultimate goal- capital growth as fast as possible. And if, as small investors, they feel that they could live with a small amount of capital loss for the possibility of growing what they have quickly, then binary options is a great route, regardless of whether they are regulated or protected under the CFTC, SIPC, NASA or anyone else. HOWEVER, as I stated before, due diligence is absolutely necessary when picking a broker.
7. There are not hundreds and thousands of binary options brokers popping up every day. That is also ridiculous. I don't know where you get these made up facts but that is unrealistic and simply false.
8. Option spreads are a way to go, but I was wrong previously about there being such a good spread on them. While they have become a way for me to enter the market on limited risk, the spreads are about 50 pips on currency futures and for a forex intraday trader, that's entirely too much, especially over the course of what could be several days. If it takes one, two, or several days to make $500 after risking $450 as long as the market goes X points? Hell, one could do that in regular trading for the same risk and the same time frame, possibly even shorter. For those looking to basically "swing trade" in a binary options style trade, yeah, by all means, Vertical Options Spreads could be a good idea. If people are looking for faster growth of smaller amounts, then no, your option spread idea is pretty much useless.
9. Marketing hype is prevalent in ALL markets, not just Binary Options.
10. lose*
I am open minded enough to accept that Binary Options as a short expiry product looks great.
Are you open minded enough to acknowledge the negatives ( as on today)
Before I jot the points 2 clarifications
1) MFG: Yes I know that was fraud (so was Sonray in Australia) and the business being OTC were NOT SIPC covered MY point is if this industry was under SIPC in USA or ASX insurance scheme or If CFTC and ASIC had similar insurance like SIPC THE client would have been protected ..
So instead of promoting more stringent rules which will create more safe and transparent playing field for everybody people like you seems to say
- It is Ok it is only small amount of money ..let anybody open shop to offer these product with lot less scrutiny
- Sine one is taking market risks.. it is ok to take other unnecessary risks.
SO from Client safety as on today ( as on today)
Relatively safe: SIPC / ASX or Canadian or FSA covered Product providers
Not so safe: All OTC under CFTC or ASIC
Not likely to be safe at all: Small brokers in small jurisdictions who might not be
capitalised enough specially in market maker model where they are taking risks
So since you are a small investor would you not like to see these kind of protections
People are happy to take real market risk ( asset going uo or down) but WHO WOULD LIKE TO SEE THE BROKER RUNNING WITH YOUR MONEY.
DO YOU????
2) "And people like you are busy chewing your nails and afraid, you think to make others afraid based on your own concerns." no i AM PUTTING FACTs IN FRONT OF PEOPLE NOT GLOSS OVER THEM
(Hence the product Negatives after point 3 below)
3) "futures and forex and everything else not covered by SIPC insurance is too dangerous "
Read point 1 SIPC to Small jurisdiction brokers! Relative safety
So about Product ( I hope you replay with specifics)
1) Conflict of Interest:
Exchange Traded NO Conflict with Product creator and provider, BO : MM model conflict does exist
( Unless They hedge their exposure .. which they do not disclose and not asked to disclose so you never Know… DO you know?
2) Transparency:
Exchange Traded = Depth known, BO Who knows? again not compelled to show
3) Definition:
Exchange Traded: Clearly defined: BO Sometime ( not always) clearly defined
4) Variety:
Exchange Traded (Option Spread mimicking Bo) .. far more variety than BO strikes, gap etc,
5) Liquidity:
Exchange traded is Likely to be high because of better marketing/ global marketing, BO! Limited book.
5) Barrier to entry to become a "broker"
Exchange member: High, BO absolutely low ( Ok I was exaggerating about thousands of BO coming up every day... but sure as hell it is easy to get in...and many are opening up .. some honest some scams) Just try asking some basic questions to online help and you will see
Look I have nothing against product concept and I HOPE THIS PRODUCT BECOMES MAIN STREAM
The issue here is the above points and average punter does not know these things... How many have even bothered to see what happens if broker goes burst. Etc
Hell we have more than enough issues in the Financial market as is don’t need to open gates to add more avenues for scrupulous operators to come in
As simple as that.
The day the product becomes safer and transparent I would be glad to promote it
Are you open minded enough to acknowledge the negatives ( as on today)
Before I jot the points 2 clarifications
1) MFG: Yes I know that was fraud (so was Sonray in Australia) and the business being OTC were NOT SIPC covered MY point is if this industry was under SIPC in USA or ASX insurance scheme or If CFTC and ASIC had similar insurance like SIPC THE client would have been protected ..
So instead of promoting more stringent rules which will create more safe and transparent playing field for everybody people like you seems to say
- It is Ok it is only small amount of money ..let anybody open shop to offer these product with lot less scrutiny
- Sine one is taking market risks.. it is ok to take other unnecessary risks.
SO from Client safety as on today ( as on today)
Relatively safe: SIPC / ASX or Canadian or FSA covered Product providers
Not so safe: All OTC under CFTC or ASIC
Not likely to be safe at all: Small brokers in small jurisdictions who might not be
capitalised enough specially in market maker model where they are taking risks
So since you are a small investor would you not like to see these kind of protections
People are happy to take real market risk ( asset going uo or down) but WHO WOULD LIKE TO SEE THE BROKER RUNNING WITH YOUR MONEY.
DO YOU????
2) "And people like you are busy chewing your nails and afraid, you think to make others afraid based on your own concerns." no i AM PUTTING FACTs IN FRONT OF PEOPLE NOT GLOSS OVER THEM
(Hence the product Negatives after point 3 below)
3) "futures and forex and everything else not covered by SIPC insurance is too dangerous "
Read point 1 SIPC to Small jurisdiction brokers! Relative safety
So about Product ( I hope you replay with specifics)
1) Conflict of Interest:
Exchange Traded NO Conflict with Product creator and provider, BO : MM model conflict does exist
( Unless They hedge their exposure .. which they do not disclose and not asked to disclose so you never Know… DO you know?
2) Transparency:
Exchange Traded = Depth known, BO Who knows? again not compelled to show
3) Definition:
Exchange Traded: Clearly defined: BO Sometime ( not always) clearly defined
4) Variety:
Exchange Traded (Option Spread mimicking Bo) .. far more variety than BO strikes, gap etc,
5) Liquidity:
Exchange traded is Likely to be high because of better marketing/ global marketing, BO! Limited book.
5) Barrier to entry to become a "broker"
Exchange member: High, BO absolutely low ( Ok I was exaggerating about thousands of BO coming up every day... but sure as hell it is easy to get in...and many are opening up .. some honest some scams) Just try asking some basic questions to online help and you will see
Look I have nothing against product concept and I HOPE THIS PRODUCT BECOMES MAIN STREAM
The issue here is the above points and average punter does not know these things... How many have even bothered to see what happens if broker goes burst. Etc
Hell we have more than enough issues in the Financial market as is don’t need to open gates to add more avenues for scrupulous operators to come in
As simple as that.
The day the product becomes safer and transparent I would be glad to promote it
Mtdarkness82
Junior member
- Messages
- 14
- Likes
- 2
Ok I will say that I would like to see some more protection for clients. As a small trader, a loss foot me is much more financially damaging than someone with more money spread out. So, sure we would all like to know our money is protected. I'm not saying some kind of insurance wouldn't be better than nothing. I'm not even saying that helping filter out some of the scammers is a bad thing. These are good things for a market and it is going to get to that point, I'm sure. One day. My biggest point is not to ignore the risks, but that binary options, as they are, is a worthwhile investment to those less risk adverse. It simply requires research, responsibility, and a little bit of hard work.
Lets go through your list though.
1. Conflict of Interest- Many of the larger brokers that have been around for a few years are limiting conflict of interest by various methods like matching buyers and sellers or using a 3rd party MM. For specifics, check my previous posts. Your last response was "so you say..." Yes, I say. I have seen no evidence otherwise and no facts have ben presented to refute this Ifact.
2. Transparency- Again, the larger brokers I deal with have a specific formula and tell you where their feed is coming from. Many post the results of the day on a web page for you to reference. Again, I have listed specifics on previous posts.
3. Definition- I'm not sure what you mean, so I'll wait for clarification on that one.
4. Variety- I guess I can kinda see what you are talking about, but I think forex traders like myself won't have a problem with that since most binary options brokers host more assets than many fx brokers. I'm pretty sure 24 option hosts more fx options than fxcm offers currency pairs, not to mention the indices. I can see stock traders having a problem though, since they are used to hundreds of assets to chose from.
5. Liquidity- Even Nadex has poor liquidity. This is a problem with binary options, but it truly isn't a problem as long as there is a market maker prepared to take the excess trades.
6.Barrier to become a broker- I'm not completely convinced this is a bad thing. As long as new brokers are coming up, the product will only improve through healthy competition. I do share your concern about the scammers out there, however, so
I can understand that you feel that more stringent requirements would help alleviate the problem.
In summary, I agree with you that binary options needs to become more unified and secure. I, however, believe that this security, as it currently is, is still a viable opportunity to those willing to do the work and take the risk. I would like all traders interested in binary options to understand the risks, the rewards, and the methods of minimizing those risks. I want them fully educated before they jump in or decide the whole thing is a scam.Ultimately, there are already billions in the binary options industry being traded, and as long as that continues, you'll get what you want- more protection and more regulation. The cftc and similar organizations will then have a choice: continue to miss out on the income potential that they are losing overseas, or make binary options a more attractive security to entice traders to keep their monday local. Currently the cftc's attitude has been "make traders stay with us by putting foreign companies out of business to keep retail traders local" and not "give retail traders what they want to keep them local". I have said before that if there was a local product just like the overseas BO product, I would stay local, no questions asked. And that product can be true exchange traded. Conflict of interest, in that case, is eliminated, not minimized, which is better. But these agencies aren't going to come to these decisions on their own. And I'm not going to wait when there are reputable companies out there already available.
I think we are on similar page...
Few clarifictions from my side
Lets go through your list though.
1. Conflict of Interest- Many of the larger brokers that have been around for a few years are limiting conflict of interest by various methods like matching buyers and sellers or using a 3rd party MM.
M: Yes that is good and true with very lareg brokers specially in FX HOWEVER
1)There is no gurantee that they will do it... As it is not mandatory ... if they can they will.
2) With small BO operators it is even more difficult to know ( for example if you ask FXCM, IG etc they will tell you infact the DMA, ECN model is promoted over MM model)
2. Transparency- Again, the larger brokers I deal with have a specific formula
M: Do they discolse it to the client show me an example? and are you talking about Cyprus BO or FX OTC by CFTC/ FSA? which one?
and tell you where their feed is coming from.
M: Transparancy also invlves disclosing market depth, WHICH BO doe sthat? and being thinly regulated they dont have to
3. Definition- I'm not sure what you mean, so I'll wait for clarification on that one.
As mentioned previously specially for Index Binary : Is it on Index spot or Future or a combination?
Specially with Binary one point diff in defination of the settlement can make you win or loose. As previously pointe dout evne IG markets and other ASIC registered Binary brokers defination of Index is Futues + fair value? meaning they can manupulate
4. Variety- I guess I can kinda see what you are talking about, but I think forex traders like myself won't have a problem with that since most binary options brokers host more assets than many fx brokers.
M: If you use Option on ICE currency futures and construct a BO you get more options then a BO and yes I was referring more about Stock and Index vanila options spreads.
5. Liquidity- Even Nadex has poor liquidity. This is a problem with binary options, but it truly isn't a problem as long as there is a market maker prepared to take the excess trades.
M: So again conflict of interest... you play against MM. specially with BO .. judge and jury same!
If BO is true exchange traded and becomes popular the marketing strength of CME/ CBOT and other exchanges is likely to give more liquidity than a Cyprus based BO broker no matter how honest it is
By the way IG AUstralia confirmed that with Binary and IG spreads IG is the MM
6.Barrier to become a broker- I'm not completely convinced this is a bad thing. As long as new brokers are coming up, the product will only improve through healthy competition. I do share your concern about the scammers out there
M: So by the time good one remains lot of scammers will come and go! what sort of society would that be?
I can understand that you feel that more stringent requirements would help alleviate the problem.
M: There you go that is the key point my friend
In summary, I agree with you that binary options needs to become more unified and secure. I, however, believe that this security, as it currently is, is still a viable opportunity to those willing to do the work and take the risk.
If this "viabale opportunity" you mention is likely to have so many negatives why allow it in first place? just for promotion of the "ideology of Hands of Govt "
Again which risk are you talking about .. Market risk yes we all take it
Why would anybody promote the "other" risk
Asume you are the govt and you allow this in USA hpoing that this opportunity will only produce good robust brokers .. make it EASY for any tom dick and harry to open such a business... what woudl you say to the average MUM and DAd investor when broker runs away ... Becuas eyou teh govt did not put in enough checks and balances
Imagine this ( an example from Stock and Option world)
When one does Covered call writing ( Long Stock / stoock Call option)
The OCC makes sure that you have teh stock in teh account for ou to sell the call
Now as per your "Fre market" theory lets disbanned the OCC and let everybody allow sellin naked calls.. "Hoping:" that of called away they will have thestock..
At teh end of the day it seems people are defending these tin pot brokers only because it offers short expiary and easier platform nothing else is a positive
I would like all traders interested in binary options to understand the risks
, the rewards, and the methods of minimizing those risks.
M: How cna you minimise the risk from a Cyprus Malta based BO operator? HOW exactly?
Currently the cftc's attitude has been "make traders stay with us by putting foreign companies out of business to keep retail traders local"
M: M: Here we go again CFTC bashing does not make teh various risks I have been mentioning
and not "give retail traders what they want to keep them local".
M: If that was tur why woudl they even allow Nadx in firts place?
I
Few clarifictions from my side
Lets go through your list though.
1. Conflict of Interest- Many of the larger brokers that have been around for a few years are limiting conflict of interest by various methods like matching buyers and sellers or using a 3rd party MM.
M: Yes that is good and true with very lareg brokers specially in FX HOWEVER
1)There is no gurantee that they will do it... As it is not mandatory ... if they can they will.
2) With small BO operators it is even more difficult to know ( for example if you ask FXCM, IG etc they will tell you infact the DMA, ECN model is promoted over MM model)
2. Transparency- Again, the larger brokers I deal with have a specific formula
M: Do they discolse it to the client show me an example? and are you talking about Cyprus BO or FX OTC by CFTC/ FSA? which one?
and tell you where their feed is coming from.
M: Transparancy also invlves disclosing market depth, WHICH BO doe sthat? and being thinly regulated they dont have to
3. Definition- I'm not sure what you mean, so I'll wait for clarification on that one.
As mentioned previously specially for Index Binary : Is it on Index spot or Future or a combination?
Specially with Binary one point diff in defination of the settlement can make you win or loose. As previously pointe dout evne IG markets and other ASIC registered Binary brokers defination of Index is Futues + fair value? meaning they can manupulate
4. Variety- I guess I can kinda see what you are talking about, but I think forex traders like myself won't have a problem with that since most binary options brokers host more assets than many fx brokers.
M: If you use Option on ICE currency futures and construct a BO you get more options then a BO and yes I was referring more about Stock and Index vanila options spreads.
5. Liquidity- Even Nadex has poor liquidity. This is a problem with binary options, but it truly isn't a problem as long as there is a market maker prepared to take the excess trades.
M: So again conflict of interest... you play against MM. specially with BO .. judge and jury same!
If BO is true exchange traded and becomes popular the marketing strength of CME/ CBOT and other exchanges is likely to give more liquidity than a Cyprus based BO broker no matter how honest it is
By the way IG AUstralia confirmed that with Binary and IG spreads IG is the MM
6.Barrier to become a broker- I'm not completely convinced this is a bad thing. As long as new brokers are coming up, the product will only improve through healthy competition. I do share your concern about the scammers out there
M: So by the time good one remains lot of scammers will come and go! what sort of society would that be?
I can understand that you feel that more stringent requirements would help alleviate the problem.
M: There you go that is the key point my friend
In summary, I agree with you that binary options needs to become more unified and secure. I, however, believe that this security, as it currently is, is still a viable opportunity to those willing to do the work and take the risk.
If this "viabale opportunity" you mention is likely to have so many negatives why allow it in first place? just for promotion of the "ideology of Hands of Govt "
Again which risk are you talking about .. Market risk yes we all take it
Why would anybody promote the "other" risk
Asume you are the govt and you allow this in USA hpoing that this opportunity will only produce good robust brokers .. make it EASY for any tom dick and harry to open such a business... what woudl you say to the average MUM and DAd investor when broker runs away ... Becuas eyou teh govt did not put in enough checks and balances
Imagine this ( an example from Stock and Option world)
When one does Covered call writing ( Long Stock / stoock Call option)
The OCC makes sure that you have teh stock in teh account for ou to sell the call
Now as per your "Fre market" theory lets disbanned the OCC and let everybody allow sellin naked calls.. "Hoping:" that of called away they will have thestock..
At teh end of the day it seems people are defending these tin pot brokers only because it offers short expiary and easier platform nothing else is a positive
I would like all traders interested in binary options to understand the risks
, the rewards, and the methods of minimizing those risks.
M: How cna you minimise the risk from a Cyprus Malta based BO operator? HOW exactly?
Currently the cftc's attitude has been "make traders stay with us by putting foreign companies out of business to keep retail traders local"
M: M: Here we go again CFTC bashing does not make teh various risks I have been mentioning
and not "give retail traders what they want to keep them local".
M: If that was tur why woudl they even allow Nadx in firts place?
I