Financial regulators and law enforcement are clamping down on the binary options industry. Is this why IG Group Binary Options Sprints are no longer offered?
25 January, AtoZForex – The spread betting brokerage IG Group has decided to stop promoting binary options, informing their Affiliates about this measure yesterday. Now, the company reports that it removes one of the binary options betting products named ‘Sprints’. Why did the company take this action?
No more IG Group Binary Options Sprints
IG Group, a FCA regulated broker, decided to no longer offer its ‘Sprints’ product to new clients. Sprints are a short term up/down binary option. According to MiFID, the product falls under a complex financial product category. However, in the UK it is regulated as a gaming product.
After contacting IG Group, the broker revealed that it took this step not due to the Financial Conduct Authority (FCA) intervention. Rather this particular product is no longer fitting with the brokerage’s long-term business model. Moreover, Kieran McKinney, director of corporate affairs explained:
"We felt at this stage that the Sprints product just does not fit with where the business is headed. I think that product will come under regulatory pressure in the future. That does not influence our view - it’s simply a fact."
Yet, clients who currently use Sprints will still be able to access it. Since IG admits the fact that this is a limited risk product and is popular with current clients. The binary option Sprints generates around £15 million of annualized revenue. According to analysts from Liberum, the withdrawal of the product could be a "pre-emptive measure to mitigate further regulation".
Measures against Binary Options
The UK FCA is currently investigating binary options that are amidst forms of betting. This instrument enables investors to place bets on whether the price of an index or currency will be up or down at close of trading. Although binary options have started gaining popularity over a recent period of time, the instrument has been "tarnished" by unlawful brokerages.
Consequently, regulatory bodies and officials all over the world are taking actions to fight illicit practices of binary options brands. Earlier this month, EUROPOL held a Binary Options Summit during which it discussed the fraudulent activities withing this market.
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