Leading UK brokerage IG Group has renamed the binary options product on its website. The company is now using a new name for the same type of all-or-nothing binary outcome contracts. The company calls the contracts ‘Digital 100s’, which stands for the outcome of the trade.
Traders are given a certain scenario for a number of assets. The maximum price of a contract is 100, hence the name of the product. Traders have the opportunity to buy or sell the contract at a certain price with the minimum value of the contract being 0.
When the deal expires, the client wins if the given direction up or down has been predicted correctly.
Binary options under increased scrutiny
IG Group has most likely renamed the product to prevent bad publicity around binary options from reaching the company. The swift reaction of the firm comes as several companies from the industry, including one of the biggest brokerages Banc De Binary, have dramatically downsized. Banc De Binary has officially closed doors.
Several brokers regulated by the Cyprus Securities and Exchange Commission (CySEC) laid off staff last year. The move is a response to the increased scrutiny which regulators are applying when dealing with companies that are offering binary options.
Bad press across the UK market is also spreading a bad name for the product. Hundreds of clients across the EU have been scammed by unregulated companies offering binary options. In the meantime, the French financial regulator, the AMF, claims that a number of CySEC regulated firms have failed to repay deposits to clients participating in a ‘mystery shopper’ survey conducted by the watchdog.
Changes to binary options industry to continue
IG’s move to rename the product is an adequate marketing step and a number of regulated companies could soon follow suit. The binary options industry has caught fire last year as a number of media reports have exposed questionable sales tactics.
In response to the increased number of victims of fraudulent online binary options companies, European regulators including CySEC have dramatically changed the product. As a result technology providers started adapting to a new regulatory framework with Tradologic launching a binary options exchange product named Binarex.
(Photo: IG Group)