The Cyprus Securities and Exchange Commission (“CySEC”) has issued a circular to Cyprus Investment Firms (“CIFs”) it regulates regarding the provision of services in relation to binary options.
Conduct of business requirements to be observed by CIFs in are set out in Chapter C, Part V (Provisions for the protection of investors) of the Investment Services and Activities and Regulated Markets Law of 2009. In order to comply with these requirements CIFs must use trading platforms for reception, execution and transmission of orders which provide the client with adequate information about binary options, so that there is full explanation and transparency, and which operate in a way that is fair to clients.
In particular the asset underlying the binary option must be unambiguously identified and clearly displayed at a specific section on the trading platform or on the CIF’s website, and clients must be given constantly updated bid and offer prices of the underlying asset of the binary option and the strike price of the binary option, together with an explanation of the methodology used to calculate the strike price. If prices are not available for certain underlying assets (for example stock exchange indices) the latest value should be shown and the trading venue should be specified. Similar information should be provided on the bid, ask, and last prices at the expiry of the binary option and on the methodology used to calculate them. The expiry time must be precisely specified.
Information must also be given on the availability of the binary option concerned and clients must be given a facility to cancel any transaction in binary options within a reasonable time after its execution (not less than three seconds after the purchase of the binary option).