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The Commodity Futures Trading Commission’s (CFTC) Office of Consumer Outreach and the Securities & Exchange Commission’s Office of Investor Education and Advocacy are issuing this Investor Alert to warn about fraudulent schemes involving binary options and their trading platforms. These schemes allegedly include refusing to credit customer accounts, denying fund reimbursement, identity theft, and manipulation of software to generate losing trades.
Read the Full CFTC Fraud Advisory
Executive Interview: Yossi Beinart, President and CEO, NADEX
Chicago-based derivatives exchange Nadex (North American Derivatives Exchange) was founded in 2004 as the HedgeStreet Exchange, which was the first CFTC regulated internet-based futures and derivatives exchange.
Two years later in 2006, the company had two major investment partners which were the Chicago Board Options Exchange which purchased a minority stake in HedgeStreet in February 2006 and assisted in marketing the company’s exchange traded binary options, under the “hedgelets” designation. In March 2006, Norwest Venture Partners provided a multi-million dollar investment in the company.
In 2007, UK based IG Group announced intent to acquire HedgeStreet and later in the year completed the purchase of the company.
Soon after the acquisition, IG Group renamed HedgeStreet to its current name, Nadex. The exchange has continued to major on exchange traded binary options and maintains a different stance to the range of other binary options companies in the market.
In this week’s Executive Interview, Forex Magnates speaks to Nadex’s President and CEO Yossi Beinart on the intrinsic detail surrounding Nadex’s corporate profile and direction.
Read the full interview at Forex Magnates
Nadex Commends The CFTC’s Action Against Unregistered Binary Option Platforms
As the only CFTC-registered exchange that provides retail traders with direct membership and the opportunity to trade a complete array of binary options on forex, commodity futures, stock index futures and economic events, the North American Derivatives Exchange, Inc. (Nadex)commends the U.S. Commodity Futures Trading Commission (CFTC) for its aggressive action yesterday to protect U.S. traders.
The CFTC filed a civil Complaint charging two companies based in Ireland, Intrade and Trade Exchange Network, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. In announcing this action, the CFTC’s Director of the Division of Enforcement stated, “It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt.”
As a Designated Contract Market and a registered Derivatives Clearing Organization subject to regulatory oversight by the CFTC, Nadex fully supports the US regulator’s efforts to crack down on illegal off-exchange market activity, particularly when that activity is directed at retail traders. Timothy McDermott, Nadex’s Chief Regulatory Officer, stated: “Recent events have demonstrated the importance of regulation and oversight to protect the markets and especially the retail trader from fraud and abuse. The marketplace has seen a proliferation of unregistered platforms offering binary options to US residents and this action by the CFTC sends a strong message to the operators of those platforms that such activity will not be tolerated.”
Letter from Nadex CEO Commenting on PFG Regulatory Actions
In light of the recent news regarding the regulatory actions and bankruptcy filing by our FCM Member firm Peregrine Financial Group, Inc. (“PFG”), we felt it was appropriate to provide our Members with a statement regarding the situation.
All PFG customer funds on deposit with Nadex are held by Nadex in fully segregated accounts at Nadex’s bank. Those funds, which represent a very small portion of PFGBest’s total customer segregated funds, will be held by Nadex until disbursement is directed by the regulators and the bankruptcy court. All PFGBest customer positions at Nadex expired on Monday July 9 and PFG has no remaining open positions at Nadex. Nadex incurred no loss as a result of its relationship with PFGBest.
Nadex is a fully regulated exchange and clearinghouse. We do not trade, either on Nadex or elsewhere. Nor do we leverage customer deposits through exotic investments; instead, we currently hold all customer deposits as cash in properly segregated bank accounts. Moreover, all products traded on Nadex are fully collateralized, which means that the funds used to establish positions on Nadex must actually be on deposit with Nadex in its segregated bank account prior to an order being accepted by the exchange. This process of checking each order against the funds available to support that order, referred to as “Cap Checking”, ensures that funds sufficient to cover the maximum possible loss on any trade (and conversely, to pay out the maximum possible profit on any trade) is collected in advance of the trade and held at the Nadex clearinghouse.
At Nadex, we take the integrity of the exchange and the safety of customer funds very seriously. Beyond adhering to the regulatory requirements for segregating customer funds, we feel that our fully collateralized products and the Cap Checks required by the Nadex Rules add additional levels of security that are not available on any other US exchange.
Chief Executive Officer
Nadex Responds to CFTC Decision on Political Events
Nadex was notified by the Commodity Futures Trading Commission ("CFTC") that the commission had issued an order disapproving each of the proposed Nadex Political Event Derivative Contracts. We are disappointed that the CFTC has disapproved our political event contracts. While we will review the CFTC's decision, we feel strongly that these products meet all legal and regulatory criteria for listing, and that the public would benefit from having these products traded on a well-regulated exchange, rather than an unregulated offshore venue as currently is the case. That said, we will continue to offer retail market participants the opportunity to trade binary options and spread contracts in a broad range of financial markets that are unaffected by this decision, which was limited to election contracts.
Read more about the Political Event Contracts response in the Press Release.
Nadex 1099 FAQs
1099-B statements will be mailed during the first full week of February. Please be advised that these documents will be sent to the mailing address on file for your account. To view the mailing address we have on file for you, please visit the "My Account" section of the Nadex platform. If there was no activity in your Nadex account during 2011, you will not be sent a 1099-B statement.
To view the Frequently Asked Questions regarding your Nadex account click on 1099 FAQs (PDF, 342K).
Nadex Political Events Contracts Update
The North American Derivatives Exchange (Nadex) has been notified by the Commodity Futures Trading Commission (CFTC) that its application to offer “Political Event” Binary Options has been received and will be subject to the CFTC's 90 day review process. While we believe these contracts meet all requirements for immediate listing, we respect the CFTC's decision and we are happy to assist their review. We are confident the Commission will see the merits of providing a regulated market for Political Event contracts. Similar contracts are currently offered only on unregulated venues – one of which is domiciled outside the United States – that do not provide the basic safeguards afforded to users of regulated markets in the U.S.
Nadex is an exchange focused on the individual retail trader, founded on the belief that everyone – not just large institutions and Wall Street firms – should be afforded an opportunity to trade markets. All of the contracts listed on Nadex are low cost, limited-risk contracts designed to decrease the capital needed to trade financial markets. Nadex has intentionally set position limits at 2,500 contracts in order to prevent market manipulation and encourage market participants of all sizes to take an economic position on the outcome of some of the most important national election results in 2012.
Read more about our Political Event Contracts response in the Press Release.
Nadex Announces Political Event Contracts Filing
Nadex announced today that it has filed a notice of intent to offer for trading “Political Event Contracts” on the 2012 elections for President of the United States as well as majority party control of the U.S. Senate and U.S. House of Representatives. The filing serves to bring federal oversight to popular markets that have existed in an unregulated environment in the US and overseas for many years.
Read more about our new Political Event Contracts filing in the Press Release.
Nadex Launches Volatility Sentiment Index Number
Nadex announces the release of a daily Volatility Sentiment Index (VSI) number for each of the key asset classes on which it bases its binary option contracts. While many other market volatility measures do a good job of measuring institutions' cost of insuring their portfolios, the Nadex VSI indicators aim to capture a daily snapshot of how the speculative trader views market volatility.
Read more about our new Volatility Sentiment Indices in the Press Release.
Nadex Co-Sponsors NIBA Conference in Chicago
We are pleased to announce that Nadex will be one of the co-sponsors of the upcoming NIBA (National Introducing Brokers Association) Sales and Marketing Conference to be held September 12, 2011 at the UBS Tower in downtown Chicago.
Read more about our latest sponsorship in the Press Release.
Nadex Adds New EUR/JPY and GBP/JPY Binaries and Bull Spreads to its Forex Product Line
We are pleased to announce further expansion of our forex product range, including the popular Yen cross pairings EUR/JPY and GBP/JPY Binary and Bull Spread contracts. Coupled with this expansion, Nadex is also doubling the current number of strike prices on its existing weekly Forex Binary Contracts, thus giving traders the opportunity to target entry into the currency markets at a much more precise level.
Read more about our new EUR/JPY and GBP/JPY Binaries and Bull Spreads Press Release.
Nadex Expands Equity Index Product Line with New US SmallCap 2000 Binaries and Bull Spreads
We are pleased to announce further expansion of our equity index product range, including new US SmallCap 2000 Binary and Bull Spread contracts. The new US SmallCap 2000 products, which are based on the ICE Russell 2000 Index Mini Futures, were added in response to rapid growth in trading volume on our equity index product.
Read more about our new US SmallCap 2000 Binaries and Bull Spreads Press Release.
Nadex Offers New AUD/USD Binaries and Bull Spreads
We are pleased to announce further expansion of our forex product range, including new AUD/USD Binary and Bull Spread contracts. To address client demand, traders on Nadex will be now able to trade binary and spread contracts with an Australian Dollar/US Dollar underlying. Additionally, Nadex has adjusted the strike intervals for its existing forex intraday binaries.
Read more about our new AUD/USD Binaries and FX Bull Spreads Press Release.
Nadex Signs PFGBEST as Newest FCM Member
Nadex, the first and only regulated retail-focused futures exchange in the United States, announced its newest Futures Commission Merchant (FCM) member, PFGBEST, one of the nation's largest non-clearing U.S. FCMs. This membership permits PFGBEST to offer customers access to retail-sized, limited risk and fully collateralized contracts offered on the Nadex platform.
Read more about signing PFGBEST as our newest FCM Member in the Press Release.
Nadex Launches Expansion of Product Range for Forex Traders
We are pleased to announce a significant expansion of our forex product range - FX Bull Spreads. Starting today, traders on Nadex can choose from a total of 70 daily and intraday FX Bull Spreads on each of the major forex pairs. The new range of exchange traded derivatives is ideal for active U.S. forex traders looking for leveraged, short-term trading opportunities with the benefits of a transparent, regulated exchange market.
Read more about our expanded product offering and new FX Bull Spreads in the Press Release.
Nadex Opens Doors to FCMs
We are pleased to announce we have recieved CFTC approval to allow intermediated access to brokers. This permits futures commission merchants (FCMs) to provide their customers with access to retail-sized, limited risk and fully collateralized contracts offered on the Nadex platform.
Read more about our recent approval allowing brokers' intermediated access to Nadex in the Press Release.
Nadex extends trading hours
Nadex, the only government-regulated, retail-focused, online futures exchange in the United States, extends trading to 23 hours. Read the Press Release for more information.
We are pleased to announce the expansion of our equity index and commodity products to include US stock indices and agricultural commodities.
Stock indices: Wall Street 30, US 500, and US Tech 100
Commodities: Corn and Soybeans
See our Range of Markets section for the full range of products listed on Nadex.
Nadex, the North American Derivatives Exchange, is here. New name, new website, new products, new trading platform. Read the Press Release for more.
We’re always happy to answer any questions you may have. Feel free to get in touch by phone, mail or email.
Meet the Team
Nadex is backed by more than 100 years of combined financial, technological and regulatory experience.