Is Opteck Regulated?

Opteck logoOne of the most common questions that customers want to know before signing up with a particular binary options broker is whether or not said broker is regulated. This is 100% reasonable and should be part of every potential customer’s due diligence process when selecting a broker. The binary options broking industry is by and largely unregulated, and the nature of the industry has given rise to a few bad apples which have unfortunately tainted the reputation of the entire industry. It also does not help that regulatory bodies such as the Securities and Exchange Commission and the Commodities Futures Trading Commissions in the United States, or the Israeli Securities Authority tend to view binary options in general with suspicion, making it practically impossible for even legitimate brokers to obtain licenses from them.

Nevertheless, there are regulatory bodies that binary options brokers can turn to in order to increase their legitimacy. One such entity is the Cyprus Securities and Exchange Commission (“CySec”). While it is true that in the past the agency had a reputation for being lax with enforcement and regulations and attracting all sorts of shady financial entities, that has now changed and CySec has demonstrated a strong commitment to becoming a respected regulatory body with stringent rules and enforcement. To that end, in 2013 the agency enacted a policy change where it decided that binary options would be considered as a financial instrument and thus come under stricter financial regulations. As a result of that policy change, all binary options brokers operating out of Cyprus had 6 months from the date of the announcement to be CySec regulated. For example, CySec has fined binary options broker Banc de Binary EUR350,000 for soliciting US residents and not disclosing ties to an affiliated business enterprise.

As such, CySec has become one of the go-to regulatory bodies that binary options brokers use to obtain licensing and they are currently recognized as the most popular and legitimate regulatory body regulating binary options brokers. In that vein, we strongly encourage customers to only trade with brokers that are licensed by CySec.

The good news for traders who are potentially considering Opteck has their preferred binary options broker is that, yes, Opteck is indeed a regulated entity under CySec. This step alone puts CySec above the majority of binary options brokers out there and is a huge positive in terms of their legitimacy. If you are a trader whose personal policy is to only do business with regulated binary options brokers (a wise policy), you can safely add Opteck to your list.

Start trading

Opteck Scam Review

Unfortunately, many binary options brokers have been exposed as scams or practicing unethical or fraudulent business practices. These may include practices such as withholding customer’s funds by preventing withdrawals, which can take the form of highly restrictive withdrawal policies; a common example is applying a very high minimum trading volume requirement on bonus-credited accounts, with the minimum trading volume expressed as a multiplier of the total account funds, being the trader’s deposits plus any credited bonuses. Thus, unscrupulous brokers often lure in unsuspecting customers with promises of easy bonuses, sometimes even crediting a customer’s account with a bonus without asking or even informing the customer. The customer then finds that he or she is unable to make any withdrawals from said account until the minimum trading volume requirement is met, or having to pay stiff penalty charges. Most brokers, including many legitimate ones, have the same requirements on bonuses, although the better ones usually enact lower multipliers on minimum trading volumes.

It is in this area that Opteck stands out clearly from the field. Firstly, Opteck only applies the minimum trading volume requirement to select bonus types; Opteck does offer bonuses that do not come with said requirement, such as risk-free bonuses (which allow the customer to use the bonus to keep making trades up to the first profitable trade, after which the bonus becomes void). Secondly, Opteck calculates the minimum trading volume requirement as a multiplier of the bonus portion only, as opposed to the standard industry practice of it being a multiplier of the sum of deposits and bonuses. This means that although the multipliers that Opteck quotes are in the 40 – 50x range which is on the higher end in the industry, in which multipliers generally range from 20 – 60x, the actual minimum trading volume figure would be much lower as it is only a multiplier of the bonus portion and not the total account funds. Thirdly, Opteck also keeps any credited bonuses separate from a customer’s account until the minimum trading volume is met, and up that point the customer is free to withdraw his deposits per the usual procedures. This policy also prevents a broker from crediting a small bonus amount to an account which can then lock down the funds in an entire account. The example below illustrates an example of how such a shady practice might work:

John is signed up with X Broker, which has a minimum trading volume requirement of 40x total account funds in accounts credited with a bonus. John currently has $20,000 in deposits in his account and is one day surprised with a $1,000 bonus, bringing his total account funds to $21,000. While the bonus is small compared to his deposits, due to the bonus, he now cannot withdraw any funds from his account without paying stiff penalties until the minimum trading volume of $840,000 (being $21,000 x 40) is met! In this way, X Broker has locked in John’s substantial account balance for the small cost of providing him with a small bonus.

Luckily, it seems that Opteck has recognized the potential for abuse inherent in such a bonus policy. Using the same hypothetical scenario above, if John had signed up with Opteck instead with $20,000 in account funds and received a $1,000 bonus with a 40x minimum trading volume requirement, two major differences would be evident. Firstly, the minimum trading volume that John would have to satisfy would only have been $40,000 (being $1,000 x 40), and up until that requirement is satisfied, John would have been free to withdraw any and all of his initial $20,000 deposit amount. This prevents Opteck from abusing their bonus policy and is a highly positive sign of their focus on being seen as legitimate, customer service-oriented broker.

To sum it up, the fact that Opteck is now regulated by the CySec, coupled with evidence of their customer-focused policies such as the aforementioned bonus policy, indicates that Opteck is extremely unlikely to be a scam.

Opteck - screenshot

Opteck Withdrawal

As we talked about in the above section, Opteck has very permissive withdrawal policies, particularly when it comes to bonuses, which greatly increases its legitimacy in our eyes. Other unscrupulous broker tactics may be arbitrary cancellation of withdrawals, or simply not processing withdrawals timely or even at all. This is highly unlikely to be the case at Opteck, as such tactics would put it at severe risk of being penalized by the CySec which would include loss of both licensing and legitimacy as well as the potential for heavy financial penalties.

Let us now take a look at Opteck’s stated withdrawal policies. Unfortunately, as we have mentioned in our Opteck broker review, while Opteck is almost certain to be a legitimate broker, its withdrawal policies include many fees which put it at below par compared to the rest of the industry. For instance, Opteck charges a 3.5% service fee (or $30, whichever is higher) on all withdrawals, with the exception of giving their Platinum, Black, and VIP members one free withdrawal a month. The maximum service fee applicable per withdrawal is $3,500, which implies a withdrawal amount of at least $100,000; an extremely high amount.

Opteck also has a total withdrawal timeline of up to 15 business days, with withdrawal requests processed within 5 business days plus up to an additional 10 business days for the funds to reach the customer’s account. This is also considered as below average for the industry and is definitely on the higher end of the range when it comes to the total time from withdrawal request up to receipt of funds. Minimum withdrawal amounts are $50 ($100 for wire transfers), which is in line with the industry standard. Withdrawal and deposit payment options of major credit cards, online payment systems (Neteller, Skrill, CashU, Webmoney), and wire transfer are also standard, although we note that most brokers do not typically offer the Webmoney option, which is a plus for Opteck.

One last thing we want to highlight is some of the other types of fees that Opteck charges. For one, it charges a $7.50 monthly maintenance fee (denominated in your trading currency of choice), as well as profit clearance fee, which is Opteck’s cut of your profits on all successful trades. Its profit clearance fee structure is as follows:

$250 or less = $1.50

$251 – $500 = $2.00

$501 – $1000 = $3.00

$1001 – $2500 = $4.00

$2501 or more = $5.00

Again, these additional fees are likely due to Opteck compensating for allowing greater permissiveness in other areas, such as bonus withdrawal requirements. These fees are also stated plainly on its website and are definitely not intended to be hidden or misleading. That being said, all potential customers should be made aware that such fees will be applicable prior to signing up with Opteck.

Opteck Tips

While binary options trading is nowhere near as complicated as the name might suggest, there is definitely basic knowledge that needs to be learnt prior to starting to trade. To that end, Opteck has helpfully included an Academy section on its website with the aim of educating users on everything from the basics about ‘what are binary options’ and the various asset classes, to advanced trading strategies such as hedging and correction trading.

The Academy section on Opteck’s website is quite extensive, with numerous informational articles, 22 video tutorials, webinars, and even an ebook on binary options trading. All registered users will receive access to the above upon signing, and further, for Opteck’s Bronze account members and above (Bronze being the second lowest account tier with a minimum $500 deposit), demo accounts ranging  from $5,000 up to $50,000 are also provided to allow traders to truly maximize their trading experience and knowledge. With many binary options brokers nowadays unwilling to offer demo accounts, it is refreshing to see Opteck offering such generous demo accounts, although we wish that it offered them even to its lowest account tier members (Green accounts with minimum deposits of $250) as they are the ones who are likely to need it the most.

Start trading

References/Further Reading:

  1. A Stochastic Integer Programming Model for Incorporating Day-Ahead Trading of Electricity into Hydro-Thermal Unit Commitment (Matthias P. NowakRüdiger SchultzEmail authorMarkus Westphalen)
  2. Factors Affecting the Level of Trust and Commitment in Supply Chain Relationships (Ik-Whan G. Kwon, Taewon Suh)
  3. Toward An Effective Watershed-based Effluent Allowance Trading System: Identifying the Statutory and Regulatory Barriers to Implementation  (Kurt Stephenson, Leonard Shabman, L. Leon Geyer )
  4. Regulatory and Legal Pressures and the Costs of Nasdaq Trading (Paul Schultz)
  5. Utility investment behavior and the emission trading market (Douglas R. Bohi∗, Dallas Burtraw)
  6. The implementation of an electronic market for pig trading in Singapore  (Boon Siong Neo)
  7. The Economic Effects of EU-Wide Industry-Level Emission Trading to Reduce Greenhouse Gases: Results from PRIMES Energy Systems Model (P. Capros L. Manzos)
  8. The Launch of Banking Instruments and the Figuration of Markets. The Case of the Polish Car-Trading Industry (HERBERT KALTHOFF)
  9. Dual-capacity trading and the quality of the market (Ailsa Röell)
  10. Predicting and explaining the adoption of online trading: An empirical study in Taiwan  (Ming-Chi Lee)
  11. Method and apparatus for trading securities or other instruments on behalf of customers (Steven M. H. Wallman)
  12. Trading Off Between Value Creation and Value Appropriation: The Financial Implications of Shifts in Strategic Emphasis  (Natalie Mizik)
  13. Defining and Estimating a Trading Area (David L. Huff)
  14. Dynamics of price and trading volume in a spin model of stock markets with heterogeneous agents  (Taisei Kaizojia, Stefan Bornholdtb, Yoshi Fujiwara)
  15. Fraudulently Misstated Financial Statements and Insider Trading: An Empirical Analysis (Scott L. Summers and John T. Sweeney)
  16. The Economics of Futures Trading (B. A. Goss, B. S. Yamey)
  17. Information Technology and Screen-Based Securities Trading: Pricing the Stock and Pricing the Trade (Eric K. ClemonS, Bruce W. Weber)
  18. Network-based trading system and method ( Miral Kim-E)
  19. Electronic Call Market Trading  (Nicholas Economides, Robert A. Schwartz)
  20. The Informational Role of Upstairs and Downstairs Trading (Sanford J. Grossman)

Leave a Reply

Your email address will not be published. Required fields are marked *