After issuing warnings, the Austrian regulator (Finanzmarktaufsicht or FMA) has moved to ban permanently binary options. As always with such decisions, it is not preventing Austrians to trade binary options. It is a ban that concerns entities that are regulated in the country about the prohibition on the marketing, distribution or sale of binary options to retail clients in or from Austria
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Making ESMA temporary measures permanent in Austria
As such, the decision of the Finanzmarktaufsicht is not changing much the landscape of binary options in Austria. Similar “temporary measures” are taken every three months by the European regulator (ESMA). Although there are some substantial differences between both decisions, the idea is the same: prevent any company based and regulated in the EU to sell/market binary options to Austrian retail investors.
The regulator based in Vienna is just following in the footsteps of its peers in the UK, Poland and in the Netherlands. As usual, CFD’s are also in the crosshair of the regulators, but in that instance it is about heavy restrictions. Those new measures will come into force on May 30.
Can I trade binary options in Austria?
Yes, since the ESMA and FMA decision simply forbids companies operating under their jurisdiction to offer binary options trading. It is not preventing retail traders to trade binary options. Therefore, they are free to trade binary or smart options with offshore brokers.
If you want to trade binary options from Austria, you therefore have to be extra cautious in the choice of the platform. Indeed, by preventing companies under their supervision to sell binary options products, the regulators take the risk to push the people they want to protect towards riskier actors based in more lenient jurisdictions. Spectre.ai is among the safe choices available to Austrian traders. Particularly due to the fact that it has an option to trade in a completely decentralized way, with your funds held on a segregated wallet and your winnings paid immediately.
FMA warnings about binary options
In january 2017, the FMA issued a warning about BO, that said:
“The past has demonstrated that investors have frequently not been aware of the risks of such products, and have also sustained considerable losses. We would therefore strongly advise private investors against investing in such investments without having been informed about the risks entailed and having received sufficient pre-sales advice. Ultimately, if something sounds too good to be true, then it probably isn’t true,” commented the FMA’s Executive Board Members, Helmut Ettl and Klaus KumpfmĂĽller.
In addition the FMA also advises that the provision of investment services in conjunction with financial products, for example binary options and contracts for difference in Austria, is exclusively permitted for licenced investment services providers, i.e. credit institutions and investment firms. However, such investment services may also be offered under the freedom of establishment and freedom to provide services by investment service provided in order EEA Member States. Such companies are not directly supervised by the FMA, but by the respective competent supervisory authority in their home Member State.
The FMA explicitly advises against becoming a customer of a company that is neither authorised by a government authority nor is a supervised entity. The risk of becoming the victim of criminal acts, in particular fraud or breach of trust, are particularly high in this case. Any form of legal enforcement or enforcement of claims for damages sustained may subsequently prove to be particularly difficult or even impossible.
Finally the FMA recommends that all investors, prior to the conclusion of securities transactions, to inform themselves fully about the opportunities and risks associated with such transactions as well as to establish whether a provider is in fact authorised for such transactions, and not to conduct any transactions, for which there is no clearly understandable and transparent information available.”
Thursday, December 24, 2020