Banc de Binary Settlement of €350,000 to CySEC


CySEC has made the announcement on the 27th January 2016 that the binary options broker, Banc de Binary (BDB) has paid the settlement of €350,000. The €350,000 settlement is the largest sum that CySEC has imposed on the binary options broker.

The announcement that CySEC made only reveal a small amount of details about the violation to the regulator’s rules. If you read the regulations of the CySEC, you will learn that it is a violation even if they could only come up with reasonable ground to be suspicious that it violates its rules.

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The fine that Banc de Binary pay is for the suspicious of possible violation of the requirement cited in 18(2)(a), (d), (e) and (i) in Part III of the Article 28 (1) in the CySEC regulation. Another violation has to do with the provision in Article 36(1), (a), (b) and (d) of the CySEC law.

The violations has to do with a number of things that Banc de Binary did wrong. Banc de Binary was charged for using marketing materials that are deceptive and convey the wrong idea to the customers. CySEC also charged the broker for failing to carry out its contract obligations with the clients. The information that the broker provide on the assets types listed in the trading platform is insufficient. Besides, there isn’t enough information on the company’s background at its site.

The violation has to do with some of the modifications that CySEC has done on its law recently. The new law requires brokers to explain certain types of options contracts that they list on the trading platforms. A different violation is that the policy of Banc de Binary is missing some important information and that it did not set up the proper procedures to make sure it will meet the requirements in the CySEC law. This is in regarding to the provision in the CySEC law including managers, staff, agents and other entities that are related to the Banc de Binary brokerage business. The violation of the law stated in the 28 (d) article is possibly referring to the performance of the Banc de Binary broker as the trading signal provider.

The main purpose of the investigation that CySEC carried out is to see if Banc de Binary has fail to obey any regulation in the CySEC law. The binary options regulator, CySEC, has the authority to impose a fine on brokers it regulates if it has grounds to believe that it violate any of the provision on its legislation. The settlement amount that Banc de Binary pay is significantly more compared to the actual fine amount that CySEC imposed on other brokers. The reason is that Banc de Binary did not want its reputation to be tarnished if CySEC really finds that it is guilty.

If BDB did nothing wrong against the CySEC law, it would have allowed them to carry out the full investigation. The settlement is to prevent CySEC from proving that it is guilty and cause damage to its reputation. This is a common issue to happen to the top binary options broker in the industry. Banc de Binary is a top broker that pays a lot of attention to what the media says because it care about its reputation. Banc de Binary paid the larger settlement sum because it wants to avoid all the bad consequences that could happen as a result of the possible conviction for example criticism and bad press.

The bad impression that is sent out in the media could cause Banc de Binary to lose a lot of prospective customers. It is not clear whether CySEC is offering settlement as an option for broker who wants to protect their customer base. If this true, it means that CySEC is helping its regulated brokers to present a good image before customers by hiding their faults. It is also not clear whether CySEC will require Banc de Binary to take any action in the near future to make sure they comply with its law.

Last year, Banc de Binary was also fined by CySEC for €20,000 in May 2015 because it violate against two Cypriot clauses. The first clause is a violation against a rule stated in the Article 6 (9) which deals with the 2007 Investment Services and Activities and Regulated Markets Law. Banc de Binary broke the rule by providing operational services that its CIF license is not allowed to provide. The second clause that the broker violate is it fails to make clear the business relationship with a different company.

After 3 months, Banc de Binary was fined with €22,000 for breaking the rules in the money laundering and terrorist laws. The settlement paid by Banc de Binary is not considered as an income for CySEC but the money will be received as an income by the Treasury of Republic.

Page Updated: May 10, 2016

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