Nadex Offers a Counter-Argument to Canada’s Binary Options Ban

Almost all of the complaints received about binary options have been related to the first definition binary options, the so-called fifty/fifties.

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In the light of the latest proposed ban on binary option in Canada, there has been a growing number of comments from companies and institutions who wanted to voice their opinion on the matter.

Nadex’s CEO Timothy G. McDermott sent a comment letter to the regulators of Quebec and Alberta on May 29, 2017, in which he refers to binary options definitions that were targeted by the ban. According to the comment, the letter argues that the proposed ban fails to recognize the distinction between two types of binary options that currently exist.

The first one is the simple up/down called ‘’fifty/fifties’’ that is mostly being marketed by completely unregulated firms which are mislabeling them as ‘binary options’. The other one is the ‘volatility-driven binary options’ (volatility binaries) that have been in existence for years and have been offered by regulated firms from Japan, Europe, and United States.

As it turns out, almost all of the complaints received about binary options, have been related to the first definition binary options, the so-called fifty/fifties. In fact, seeing that the numbers are so high, Nadex feels it might be appropriate to not allow regulated firms to even offer the simple fifty/fifties type contracts.

They also believe that these simple contracts should not be identified with the term ‘binary options’ but rather to be seen as a financial instrument with the profile of a fixed odds bet.

Nadex also proposed to the authorities that instead of an outright ban, they should be collaborating with the big search engines to limit online advertising of fifty/fifties in Canada.

Also, the proposed instrument refers to a ban on all binary options with expiry times that is less than 30 days and Nadex makes an interesting point regarding the expiry times ordeal. The arguments say that all options, even the longer-term contracts, will eventually have expiry times that are less than 30 days. When the contract nears its expiration date it will become a one week, one day, one hour and finally one minute. This clearly implies that the 30-day limit is completely susceptible to different interpretations.

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