Market protection and binary options traders
Consumer protection is a significant factor in most markets, consumer protection can be created by consumer organizations, government agencies, non-governmental lobby groups and sometimes even producers themselves. Consumer protection is an important tool to contribute to creating sustainability in most markets. Consumers require to be protected from aggressive advertisements, abnormal pricing and to ensure organizations deliver what they promise to. Consumer protection is a continuous activity that is every government top priority when they create laws and regulations to govern and promote safe trade especially in binary options trade where there have been an incidences of scam in which most customers lose their deposits.
Additional rules in binary options advertising are aimed at promoting a more educative advertisement strategy since most consumers are not aware of the risks involved in this trade. Many brokers are not sincere to clients in that they tend to conceal the involved risks to their customers and prospective customers. This behavioral activities is very unacceptable and can result in clients being forced to trade in unacceptable risks that they are not even aware of themselves. To respond to this government agencies regulating binary options has made it mandatory for brokers to include risk warnings in most of their advertisements to make the consumers aware of the risks they face. This has made advertisement of binary options through online media difficult because most online advertisements have to meet a certain word count. Google advertisements are also difficult to make since they require a full risk disclosure.
Regulatory authorities have to ensure the safety of the traders by making sure that the binary options brokers assess the client suitability to participate in binary options trading. Brokers have to make sure operators are aware and understand the risks involved in these trades. Traders who want to join the binary option trade are required to fill particular registration forms and questionnaires before making deposits. It is also a requirement to for brokers to establish documentation of every transaction taking place in an organization. It is further a requirement by the regulatory body for all organizations in binary options trading in Israel to create a kitty to caution the traders against all potential risks.
The regulator also makes sure that there is a leverage rate that is established and should be observed by the binary options brokers. High risk assets should create a leverage amount of up to 20 to 1 of the total trade value. Medium risk assets should be allocated a 40 to 1 of the trading value whereas the low risk assets are accorded a 100 to 1 ratio of the value traded. These changes in business operations and regulations have not made everyone happy in this particular market. The traders are enjoying a lot of comfort and protection whereas binary options brokers are expressing a lot of discomfort because of the increased regulations that are in the favor of the client. It has been noted by some stakeholders in the legislation bodies that these rules will cause some brokers to exit the market. Other dealers in the market will be forced to resort to mergers and partnerships to increase their ability to compete. These regulations are aimed to protect the traders which will result in the growth of the number of traders which will make binary options trading more vibrant than before in the unregulated era.
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Consequences and benefits of strict binary options trading regulation
The strict regulation has affected different stakeholders in this business differently; depending on an individual perspective strict regulation has both active and adverse effects of the general trading environment. Traders in binary options in Israel can now carry on their transactions in a more safe environment that is regulated by the Israel Securities Authority. Binary trading as a re3sult of strict regulation is now user friendly and reliable than before with high percentage of consumer safety and expected formalities in all the activities. Due to the regulation requirement for provision of the risk information to the traders consumers are now much aware of the options they have and their expectations. The prohibition of wrong and decisive advertisement has ensured honesty in the advertisements and less cheating of trades.
Although these regulations have had unlimited benefits to the traders and the regulation bodies some traders perceive them as unfriendly which has caused them to relocate to other less regulated markets. Less regulated markets elsewhere also features cheap operating costs since not many monetary securities and protocols are required. It is even worse for the brokers in Israel because the law forbids traders from using brokers that are not regulated and certified by Israel securities authority. Huge fines and cost of doing business have really affected binary options brokers in the market making it even harder to operate in the market.
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