The Cyprus Securities and Exchange Commission (CySEC), earlier today addressed investors, warning them of risks associated with trading in complex financial products. The range of the latter includes Forex and binary options.
CySEC says that retail investors are often finding themselves involved in trading in complex financial products via a number of Cyprus Investment Firms (CIFs) offering investment services overseas.
The watchdog is concerned about the fact that clients of CIFs may be engaged in trading in products whose nature and risks they do not fully understand. This, in its turn, may push traders into heavy losses.
In addition, CySEC notes, complex products are often aggressively advertised and marketed using enticing slogans and promises of returns that markedly exceed deposit account returns that are available elsewhere. Marketing techniques may be misleading, or to mean something different to what the investors may have understood.
Talking of misleading marketing, let’s mention that CySEC has already issued a Circular to investment firms registered in Cyprus, regarding the practices employed with regard to marketing and selling complex financial products. Aggressive language and lack of adequate information about risks are prohibited.
The CySEC reminds investors that they should refrain from investing in products they do not understand. They should also check whether the company by which they are approached or with which they wish to trade, is regulated in Cyprus.
The warning follows a similar announcement by the Cypriot watchdog published in March 2014. Obviously, investors are still grappling with high risks related to such products and the regulator has decided to once again draw the public’s attention to this topic.
To view the full text of the latest CySEC warning to investors, click here.