Binary Options Regulation
The idea of trading in binary options can be very appealing to a broad spectrum of people. The reason for this is fairly simple. It is possible to start trading without any prior experience, you need very little funds to get started and it is possible to create a good rate of return. You can also trade on the move as most brokers now have a mobile version of their account.
However, as with any type of trading there are risks and these are compounded by unscrupulous brokers. Unfortunately the binary options industry sprung up almost overnight and there have not yet been enough regulations put into place. The extent of the issue is summarized by the fact that a US trader cannot use a regulated broker as none are approved in the states yet! If you are a US resident and wish to trade you will need to use an unregulated broker and accept the risks which go with this type of trading. Using a regulated binary options broker will reduce your chances of being affected by a scam. However, just because a firm is regulated does not mean it is not a scam!
The largest and best known regulatory body is CySEC. It is governed by Cypriot law and the European financial directives. They are committed to inspecting and supervising all traders which choose to register with them. This includes proving employees reach the required standard and all relevant documents are completed and provided in a timely manner.
CySEC has been instrumental in improving the terms and conditions which are displayed by brokers. This is because the ability to withdraw funds was often denied due to cleverly worded conditions. This regulatory body works hard to ensure all firms registered with it are offering a fair and transparent service.
This is still the largest economic market in the world and, as such, represents a vast opportunity for any broker which can become established within the US. Unfortunately the protection afforded to US citizens through the governmental regulations concerning binary options and other financial instruments is so strong that very few brokers are able to offer their services to US residents.
The main regulatory body operating in the US is the CFTC which is designed to protect your funds and you from fraudulent businesses.
This country takes a different approach to the US. Instead of regulating the brokers it has been left as a very grey area. This makes it exceptionally difficult for any broker to offer their services as they will be unable to confirm whether they are falling foul of the law or not. As a result there are currently no brokers registered to operate in Canada.
This matter is complicated by the fact that different parts of Canada have different legislation and procedures which need to be adhered to.
British Virgin Islands
This is considered a part of the British Isles although an overseas part. As such all brokers operating in British Columbia must abide with the FSC binary options regulations; although it has been noted that the rules are fairly relaxed.
Any trade involving binary options is considered to be under the jurisdiction of the Australian Financial Services. This regulatory body imposes a very strict set of guidelines on any brokers registered with it. It also works hard to prevent any scams or fraud.
Although under European financial rules, there are also two bodies in France which are responsible for supervising and regulating binary brokers. These are the AMF and the Banque de France. There is no definitive regulation in place although it is not illegal to trade in binary options. This means that a French registered broker may not be as safe as a CySEC registered one.
The main organization in Italy is CONSOB; this body supervises all financial behavior and helps to protect the public from unscrupulous brokers. For a broker to trade in Italy, they must be approved by CONSOB; even if they already have a license from CySEC. There are also heavy penalties if they do not adhere to the strict rules.
This country offers complete regulation over the binary trading industry and is one of the few which do. The brokers are supervised by the Financial Markets Conduct Act. Every broker must be registered before they can receive a license and start trading in New Zealand. There are also strict rules regarding the location of the business and its staff. It is even possible to check online whether a broker is registered in New Zealand or not.
The United Kingdom
Until recently binary options in the UK was seen as gambling. However, it is now recognized as a financial instrument and is governed by the Financial Conduct Authority. There are strict guidelines designed to protect traders and it is possible that the UK will, in the future, expect all brokers operating in the UK to obtain a UK license as well as a European one.
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