Binary Options Regulation
Developments is the regulatory environment of binary options trading have been primarily triggered by the decision of the Cyprus Securities and Exchange Commission to classify binary options trading as financial services, which require adequate supervision under the European law. For the time being CySEC is the only regulatory authority that supervises activities of European binary brokers under European directive MiFID (Markets in Financial Instruments Directive (Directive 2004/39/EC)). That explains why most of the leading binary options brokers operate from Cyprus under the regulation of Cyprus authority. Please note, that UK FCA (Financial Conduct Authority) does not currently regulate binary options trading and if you choose to trade with a binary options broker registered in UK you will not have the protections offered by the UK’s financial services regulatory framework when purchasing binary options. The situation might change in the near future as according to the information published on the FCA official website (www.fca.org.uk), UK Government is consulting on proposals to treat binary options as a financial rather than a gambling product.
Trading with a regulated binary broker
Security and responsibility are probably two main things we expect from the binary options broker when we are opening a trading account and depositing money. Fraud, market data manipulation, disclosure of personal information, identity and credit card information theft are the last things on our mind when we are choosing a broker, but it is important to understand that when we trust our money and personal information to a company that is not restricted by the law or regulation we are doing it at our own risk. It might be very difficult to distinguish a reliable company from a scam broker on an unregulated market. That is why it is highly recommended to verify organizational structure and licence information of a regulated binary options broker to be sure that you are making a safe investment. Advantages of trading with a regulated binary broker include:
- Transparent, clear and easily understandable terms of service. No hidden fees or commissions
- High privacy and security standards which insure personal data protection
- Security of funds which are held on segregated accounts
- Regulated brokers are members of Investor Compensation Fund which insures protection of clients’ investments up to 20 000 Euros
- Binary regulated brokers provide accurate market data
- A trader can place a complaint with the regulatory authority in case of a dispute of conflicting situation with the broker
- Fast and secure withdrawals, processed within 3-5 business days
- Fair and clear bonus conditions.