A CySEC license is the most popular license among binary options brokers. Let’s see what it is and if traders can trust brokers with this license.
Binary options trading is much younger than Forex trading. Forex brokers have their regulators, conditions, and rules. Also, it is normal that traders checking a broker want to review their licenses, legal information, etc. Most binary options brokers are licensed by CySEC. Let’s take a detailed look at the CySEC license for brokers and traders.
CySEC (Cyprus Securities and Exchange Commission) is an organization with the function to control the activities of the stock exchange (OTC) broker, registered in Cyprus, as well as give licenses to brokers and financial investment companies. In other words, it is the organization that monitors the financial services market in Cyprus.
What is the significance of CySEC?
Let’s start with the fact that CySEC is the regulator in Cyprus. Cyprus has been a member of the European Union since December 1999. Thus, CySEC has the right to monitor the financial sector, in accordance with the legislation of the European Union.Therefore, CySEC is a legitimate organization in Cyprus, as the FSA (Financial Management Regulation and Supervision)is in the EU.
In addition, CySEC conforms to the laws of Europe and should perform its obligations, which indicates the seriousness of this organization.
Now let’s determine the basic activities of CySEC:
• To monitor the activities of investment companies licensed by CySEC,
• To control the activities of the stock and no stock brokers and dealing centers,
• Toissue licenses for investment activity,
• To control the financial transactions on the Stock Exchange of Cyprus,
• To control the activity of the Cyprus Stock Exchange (and compliance with trade regulations),
• To control the issuers located in Cyprus (rules of issue of securities and their further accommodation),
• To control the activities of portfolio managers operating in the territory of Cyprus,
• To control investment projects licensed by CySEC,
• To check the claims and to collect the materials connected with the violations, as well as the transfer of materials for further proceedings in state supervisory agencies,
• To cancel the license in cases of violation of the requirements of regulations, as well as violations of the law.
Thus, when searching for a binary options broker, the existence of aCySEC license is the important criterion. The broker with the CySEC license is obviously interested in long-term cooperation with investors.
That broker does not have the goal to steal the trader’s money in any way and disappear, because then CySEC, being a mandatory regulator, just starts the process of license cancelation and termination of the broker’s activity. Moreover, in any case, the broker has to return all the trader’s money.