04/05/2011 - SocGen's clickoptions closed on the 09/04/2010. That leaves Betonmarkets and IG Index as the two main regulated entities offering binary options - apart of course the bunch of unregulated binary options operators based in Cyprus (I would suggest you to steer clear of such outfits there).
Clickoptions offers exotic options (also referred to as digital options, binary options, binary bets, fixed odds trading or fixed odds financials) and is a direct competitor to Betonmarkets.com, Binarybets.com, Betsfortraders.com, ChoiceOdds.com and the like. ClickOptions runs its business in France and in Germany. The company is a subsidiary of Société Générale, which is an investment company sanctioned by the French Council of Financial Markets -CMF- and by the Bank of France. Its products are regulated by the COB in France. Most of the products offered revolve around French and German stocks, with some other European stocks and a limited number of globally traded indices.
The site is intended for French/German nationals (even non-residents) and you must have a French or German bank account to participate. Also, accounts cannot be created online and one needs to send ClickOptions verification identity documents by mail to open their account. The service was initially aimed at France but has already been launched in Germany and the company has plans to continue its European expansion. The company might also head for Asia Pacific over time. Their intention is to support all of the European businesses from the one system in Paris; a separate version of the system might however be installed for Asia Pacific. The site itself is very average - its a flashy interface and dazzling to the eyes on a first visit but you soon find out that this is somewhat distracting.
A variety of exotic options can be traded over the system, including European or American style contracts and limit, range and best-of options on individual stocks and groups of stocks. Société Générale offers prices on roughly 2,000 contracts on between 60 and 90 stocks and indices, with secondary levels available if investors want to get out of their trades. Some regulators can be expected to balk at the idea of retail investors trading exotic options online. But SG has tried to make the system as simple as possible, with full explanations of the downside of trades and the bid/offer spread that will have to be crossed to close out a deal. The product is not expected to generate much revenue in the near term, but it fits with SG's guiding principle of constantly seeking new markets for equity derivatives, and new ways to sell complex products. It will also be ready for a future revival in retail appetite for structured ways to take a view on equity markets, which is in line with SG's approach to the market during a testing 2001. "We had a defensive strategy, but we had fun doing it," according to Debreu.
Even more information on click options - Risk Magazine
One interesting recent development at SG is its ClickOptions website. The site allows investors to bet in small amounts, for short periods of two, four and six weeks, on scores of different exotic options scenarios. They can buy short-term barrier or touch options on French and other European stocks, or follow races between four different stocks, gambling on which will perform the best. Selling Click Options presents SG's quants with a tricky problem of pricing and hedging an options book, which - because of the shortness of the durations - cannot be merged with its wholesale markets books. And SG knows the site is widely followed in other dealing rooms - professionals will be the first to pounce on any mis-pricing of the retail options, which are expressed simply as a percentage of a €100 payout if the better gets it right. So why bother? Partly because Click Options, which is attracting around 4,000 trades a week according to SG, could be the sort of internet technology that most European retail investors eventually turn to.
Société Générale has built an innovative retail platform for the online trading of instruments that customers can tailor for themselves. Called ClickOptions, the site enables investors to make small-value bets on various types of short-term barrier, touch and rainbow options on European stocks. SocGen's investment banking arm and twice winner of Risk's equity derivatives house of the year, SG, prices and hedges these deals with its internal systems, which it will not talk about. To build Click Options, the bank hired California based Calypso Technology, which it believed could build the platform more quickly than if it attempted to construct it in-house by integrating a number of applications, says Lionel Gibert, managing director of Click Options. Paul Gardiner, Calypso's director of marketing, says the system differs from a conventional trading system in that the front-office element is the investors' own Web trading screens, while all risk management is passed through to SG's internal systems.
The system supports around 2,000 proprietary products with short expiry times - between two and six weeks - and thousands of investors. Investors must have all account information, including trades and positions, available to them in real time over the Web, and investors must easily be able to create their own trading screens. Click Options went live in May 2001, and the site is already handling around 4,000 trades a week. Calypso used Java components and development tools to create Click Options. "Calypso's Java framework lets us keep control of [proprietary trading products] even while they are functionally integrated in the system," says Gibert
In the third quarter of 2002, OnVista entered into a partnership agreement with Click Options, a subsidiary of Société Générale. Since then, OnVista has been keeping users informed about this new generation of derivative investment tools. The solution is aimed at investors wanting to realise attractive short-term returns even during difficult times on the stock markets but who find traditional trading in derivatives rather too complicated. The ClickOptions solution represents an innovative addition to our portfolio of information products, designed specifically to meet the needs of our users. Our partners benefit from OnVista's reach and the large number of users already trading in equity warrants and certificates.
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