The Complete Guide to Binary Options Regulations
If you’re looking into options trading, you need to know what to expect with binary options regulations. Here’s everything you need to get the process.
The year of 2016 was a rough one for the binary options industry. What happens in 2017 remains to be seen, though things could be shaky due to regulations.
In case you don’t know, binary options trading is a novel take on Forex trading. Rather than actually purchasing currency and waiting for it to bring significant returns, you make a binary choice.
You predict whether a particular currency pair will make gains or losses. You profit if you predict correctly.
Its simplicity has opened up opportunities for new traders and even those who never thought they could become traders.
But these days, binary options regulations are placing pressure on licensed firms. As a result, new unregulated brands are blossoming like mold.
If you’re considering options trading, it will help you to now what to expect with binary options regulations.
To be honest, the new regulations are more strict and have led to an outflow of clients. Restrictions on bonus limitations, hot sales tactics, stricter record-keeping and additional transparency requirements have made a big impact.
Add to that broker regulation and it gets messier.
The issue of broker regulation came to the forefront during the Cyprus financial crisis back in 2013 because binary option traders were concerned about the security of their trading accounts.
Popular binary option brokers in the United States are not regulated by the SEC or CFTC.
A regulated broker is almost always regulated by the Cyprus Securities and Exchange Commission which is a member of the European Union.
But using a regulated binary options broker is no guarantee that your funds are safe. CySEC is not the same as the US CFTC in that it does not offer investors the same level of protection of their funds.
The recommendation is that traders open accounts with two different regulated binary option brokers. Then test out the trading platform, test the withdrawal procedures and ensure that making withdrawals is not difficult.
The regulations are there for a reason.
Keep in mind that if a company is regulated it doesn’t necessarily conduct legal business any more than those that are not regulated are stand-ins for illegal dens of iniquity.
Bottom line – markets and economies can’t function properly without a basic set of rules to ensure physical rights, underpin transactions, and antitrust laws to safeguard fair competition.
Regulation ensures that the company is handling its business in light of the law, and to protect the company from other companies who do not apply to rules of regulation.
It’s safe to say that full regulation around the world still has a ways to go. (Many people in the binary options industry are keeping an eye to Australia, as they seem to be working it out better than most.)
In the meantime, you may want to stick with the regulated or the on-the-process binary options brokers since they’re generally considered by most experts to be a safer bet.
Have you had any experiences – either positive or negative – involving the new binary options regulations? Feel free to share your story.