Are Binary Options Regulated?

Binary options trading is the new kid in town, as a rookie it is gaining the attention of regulators lately as it is now being offered by many brokers, both old and new to the online industry.

Unlike spot forex trading, that is overseen by other foreign regulatory agencies, there are not so many regulators managing binary options trading at the moment.

With binary options gaining popularity, of course,  the ball is beginning to roll on making regulations for this relatively new way to trade. Cyprus Securities and Exchange Commission (CySEC) were the first regulatory body to think through binary options trading as a financial instrument back in May 2012.

One of the top binary options broker, in the U.S., Banc de Binary, made an initiative to search for regulation from the CFTC for its operations. Other binary options brokers are expected to follow.

Around the world, other regulatory agencies are also beginning to keep a closer eye on binary options trading. The Japanese Financial Services Authority is drafting its regulations for Japan, the biggest market for the product.

In Malta, the Maltese Financial Services Authority (MFSA) is making preparations to take charge of regulating binary options brokers in the country.

In line with this, brokers will undergo an application procedure and a strict due diligence procedure to secure its license to operate. Amongst the possible application requests are that binary options brokers fall under the Investment Services Category 3 license and will be subject to a minimum capital requirement of €730,000.

If you are arranging to open a binary options account, make sure you do it with a regulated broker. Regulated brokers are generally held to higher operating standards, and if you do have issues (e.g., trade execution, withdrawing funds, etc.), you have a higher power to help you resolve those matters with the broker.

Although unregulated brokers should not automatically be viewed as scammers, trading with them could involve danger,  for example a lack of assurances that the company’s  operating funds are kept separate from client funds. In addition, if you have an issue, there will be no one to listen to your case and take action on your behalf.

Be knowledgeable by staying up to date to  for any updates on binary options regulations.

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