Binary Options Regulations And Rules
The binary options industry began around 2008. Since that time, it has undergone tremendous growth. But the main difference between then and now is the fact many countries have decided to officially regulate binary options brokers and businesses.
Today, regulation has made binary options trading a much safer investment. Specific regulatory laws vary with each country and its regulatory agency. Brokers who break any of the rules given by their overseeing agencies are punished with hefty fines, and sometimes even a suspension of their license to operate in that country.
Below are a few key points about binary options regulation.
Are All Binary Options Brokers Regulated?
Binary options are regulated in a high number of countries and national jurisdictions. But, even with this said, it’s important to know that even if a specific country does not regulate binary options, traders based in that country can still trade.
If a country bans the offering of binary options products to its citizens, such is the case with Israel and Belgium, traders still have the power to choose any broker they wish. Countries like the United States, United Kingdom, Cyprus, Malta, Japan, Seychilles Islands and more have regulatory agencies overseeing their local binary industry. In order to start a binary brokerage firm in any of country with regulation, the businesses must apply and be granted an operating license.
Countries with a regulatory agency can choose to disallow other offshore brokers not regulated with that specific agency from offering their service to its citizens. A good example of this is the CFTC’s 2012 law that mandated brokers in most of Europe cannot offer their products to US traders.
So Is Binary Options Legal?
So in the end, is binary options trading legal? Yes, trading binary options is 100% legal unless a country has laws specifically stating that its citizens cannot invest and trade binary options.
Israel is currently working on this type of legislation, but as of yet, investors can trade with any broker they choose, so long as they accept traders from their country.
The regulations and rules for binary options trading sounds complex and tricky, and it really is, but only because the industry is so new to both investors and regulatory agencies. Many are comparing the binary options industry to the retail Forex industry while it was in its infancy.
But as always, no matter what broker is chosen, investors should always deposit money into regulated brokers who carry a positive reputation among the trading community.