Judis: On the issue of online trading industry, can you tell us, what is online trading?
Rodrik: Electronic trading, or E-trading as it is sometimes referred to, is a method of trading securities by electronic means. Technology is used to bring together buyers and sellers through an electronic trading platform and network to create a virtual market place. They can include various exchange-based systems, such as NYSE and Globex as well as other types of trading platforms, for example alternative trading systems, binary trade and much more. It is fast replacing human trading in global securities exchange markets.
Judis: How does this trade work in Wall Street?
Rodrik: On Wall Street, everything is under keen regulation. The brokers are regulated, transactions are regulated and the money is also regulated. What is its source and what is its final destination? There are rules and regulations in place that govern as to how someone can access money in a claim.
In the United States, a license to sell securities or handle client investments would have it mandatory for a person to meet certain ethical standards before starting on trading. If they don’t look out for the best interest of their client’s investments, it is a criminal offense.
On Wall Street one can’t put someone else in an investment that does not fit them. That is fraudulent to say the least. If I called up your parents and told them to put money in a certain investment and they lost it all, in theory, it is a crime therefore I could be arrested and taken to jail.
Binary trading, however, doesn’t have all that regulation and there are no repercussions whatsoever. What happens if someone loses all their money in their investment? Nothing at all.
It is quite shocking that some countries like Israel have not banned this.
Judis: Would you in your own opinion, dismiss this trade as a scam? If so, should the industry be closed? Especially the binary trade industry?
Rodrik: There is a very wide information gap between the public and these market players, and they are exploiting it to their advantage. The broker does not give you a service like in a bank, instead, he is personally wagering against you. This is a flagrant conflict of interest, because you’re betting on something, and the person reporting the outcome wants you to lose. It does not get worse than that.
The other problem, according to me, are partner sites as for example moneyonlinethai.com in Thailand, which publish absolutely fake information on such brokers as IQ Option. And Google let those sites to dominates SERP results to finally mistake users.
Such circumstances invite fraud, and there is no small number of companies that simply defraud the customer. Sometimes that fraud is very sophisticated and well thought out that it is almost fool proof. So in the question of whether or not it is a scam, I can confidently say it is a big scam.
If you must empty the bath tub, don’t empty the baby along with it, or so they say. I personally would not advise any Israeli to trade with any of these companies.
What the industry needs, is real-time regulation. There is software that can now do real-time monitoring of a company’s transactions.