Crackdown On Binary Options Triggers Defection

The rate at which regulators are clamping down on retail binary options providers suggests the industry could be extinct in the coming years. But what will the displaced binary options firms do? What about providers of technology that enable people to trade binary options? Some are defecting in advance.

O-Systems, a provider of automated trading solutions used by binary options brokerages, has announced its intention to dump binary options in favor of forex. The company is eyeing the regulated forex brokerage market.

The fintech has begun testing its solutions with select forex brokerages, and it is hoping to bring on board larger forex firms over time.

O-Systems provides a wide range of technology solutions. It is a provider of trading platforms, custom websites, system hosting and maintenance, back office services, risk management and customer relationship services among others. To better serve the forex market, O-Systems plans to boost R&D investment. With that, the fintech hopes to develop better-automated systems to support spot forex trades.

Helping forex brokers cut costs

With competition set to intensify in forex brokerage space as former binary options firms redirect their business focus to forex market, O-Systems predicts strong demand for efficiency solutions by forex providers. The company has studies forex market and noted that its revenue model is different from that of binary options. For instance, forex firms are still bogged down by high costs of customer services and sales teams, which sometimes push revenues to the negative. But with its solutions, O-Systems can help forex firms trim their costs through entirely automated trading systems. As such, forex firms can dismantle their costly call centers and operate more profitably.

Regulatory attack on binary options

The business landscape has shifted for binary options firms. Regulators in Europe, America, Asia and the Middle East have declared war on unregulated binary options providers.

The securities regulatory body in Israel, the Israel Security Authority (ISA), has banned binary options firms with offices in the country from offering their products locally. ISA is also seeking to prohibit binary options providers based in the country from selling their products to overseas investors. While preventing binary options firms from selling to offshore customers will require a revision of the existing securities laws, ISA is collaborating with offshore regulators to deny Israeli binary options the opportunity to pitch to overseas investors.

ISA has also been fining binary option firms that failed to comply with its registration requirements.

In Europe, Belgium, France, the Netherlands and several other European Union member countries have already slapped binary options industry with various restrictions.

A boon for forex market

But the crackdown on binary options market could be a blessing for the regulated forex market. Investors who are no longer able to trade binary options would be looking for alternative investment such as forex. Not only would demand for online forex trading increase, interest in social trading solutions is also likely to increase as inexperienced forex traders look for ways to trade like experts. As such, O-Systems could also find the market for its technology solutions in providing forex brokers with social trading systems.