Today CySec, the financial regulatory body of Cyprus, took the severe action of suspending WGM Services Ltd, CySec License No: 203/13.
CySec Suspends EZTrader
CySEC suspends EZTrader along with stablemates owned by WGM Services Ltd.. WGM Services Ltd owns the binary options web sites www.eztrader.com, www.globaloption.com, www.ezinvest.com and www.888Binary.com which all now state on the respective sites that the site is temporarily suspended.
CySec Bares Its Teeth
EZTrader is (or was) one of the more prominent of the binary options brokers regulated by CySec. For CySec to bare its teeth in this assertative manner is excellent news for the industry as a whole, specifically of course for the customers of binary options brokers. CySec was needing to walk a fairly narrow tightrope in that overly strict regulation was likely to frighten binary options operators off, while too lax a regime was likely to attract the attention and incur the wrath of other European financial regualtory bodies. Too often disgruntled customers of binary options brokers were more likely to ‘vent their spleen’ on blogs such as this one, whereas a complaint to the regulatory body should be the first port of call. This action by CySec can only reinforce customer confidence that the CySec-regulated broker they are using is in fact answerable to CySec in the event of customer abuse or malpractice in general.
There is little doubt that the suspension will damage client confidence in the above brokers. How much damage done will be measured by CySec’s decision to reassess EZTrader’s response in 15 days time. If the capital adequacy of the firm is established as passable then so much the better. As a SpotOption client EZTrader probably do not operate as a market-maker (which requires a €1m capital adequacy requirement) but as a broker which entails a much reduced requirement of €80,000 per broker. These really should not be issues for a company that raised $3.94m in May this year and who boast a client base expanding at approximately 3,300 per month.
In the short term, while the EZTrader brokers are suspended, no doubt there will be clients looking to move to different brokers. Yet again the extent of this damage remains to be seen.
EZTrader has recently entered into strategic partnerships with Germany and Netherlands’ premier soccer clubs, Bayer 04 Leverkusen and Feyenoord Rotterdam so how they view this development will yet again impact on the credibility of these brokers.
Finally, EZTrader in a recent press release http://www.sys-con.com/node/3187502 of September 9th announced “….that it has filed documentation with the U.S. Securities & Exchange Commission (SEC) to register its shares of common stock with the SEC to later allow re-quotation of such shares on the OTCQB market.” Good luck!