Binary Options trading industry is quite appealing for traders. The trades are fast and easy to understand, there is a possibility of using auto trading software and mobile apps are enabling traders to trade anytime and anywhere. Unfortunately, we at the Fair Binary Options must warn readers that not all brokers are fair, and that there are some who are prone to scam behaviour. This makes it hard even for experienced traders in binary options to differentiate good brokers from those who are prone to malpractice.
Binary options trading is still not defined by law in some countries, but there are some regulating bodies that can help traders make right decisions when it comes to finding the right broker. Despite the regulation of some brokers and protection such regulation gives, there are still some traders who prefer to trade with unregulated brokers. Regulated brokers do not accept US customers, and traders from the USA have to opt for the unregulated brokers, even if it means that they will engage in higher risk unless they inform themselves before depositing.
On the other hand, traders from all around the world can find a reputable broker that is regulated without much trouble. Even though, regulation is not a guarantee that a broker is not a scam, it is obviously much harder to be deceived if a broker has some rules and laws to obey. FBO has dedicated their work to uncovering bad brokers and helping traders, so sometimes we blacklist scam brokers even before the regulatory bodies revoke their authorization. However, regulators serve a purpose and make our work easier. Here you will find most renowned binary options regulatory bodies.
Binary Options Regulation EU
Cyprus Securities and Exchange Commission (CySEC) is probably the best known regulatory body in the world of binary options as it also part of the European MiFID (Markets in Financial Instruments Directive). According to Cyprus Securities and Exchange Law, Commission is obligated to supervise, observe, control and act as a competent authority, which means that all brokers who want to be registered must pass their inspection. The broker must not only provide all necessary documents, but all employees must pass Commission’s perquisition.
CySEC treats brokers as financial companies and has some specific rules when it comes to bonuses. Commission noticed that often Terms & Conditions are not clearly written and are almost impossible to understand and that bonus is often used as a blackmail in order to stop the trader from withdrawing the funds. New legislation disables that type of business practice and provides better trading experience for the traders.
The list of CySEC improvements doesn’t end there. After a period where this regulating body was more of an uninvolved observer, it became cautious watchdog that really works on improving transparency and prevents scams. In recent past, CySEC prosecuted and fined even some well-established brokers who were not following their guidelines. They put more effort in controlling all necessary documents brokers have to provide in order to continue doing business in a legal way (keeping record of complaints etc), and even pay more attention to false advertising.
Transparency has become a top priority, and there are more and more procedures and rules to be followed. CySEC now requires clear T&C, and well-structured websites that explain the risks of financial trading. More active approach is proved to be better than a passive one, as binary trading is safer thanks to the new rules implemented by CySEC.
Some of the forex brokers who are regulated by CySEC are
- iq option,
As we already mentioned, regulation is not a guarantee for fair practice. There have been many cases of misconduct, spam and other fraudulent activities that CySEC had to react to. One of the most famous cases like this was the case of WGM Services Ltd, that was behind the broker known as EZTrader. The broker managed trader’s account without authorization and it cost the trader $30,000. Even before the broker was stripped of their license, Fair Binary Options blacklisted them and helped some other traders retrieve their money even before CySec revoked their authorization which is a just sign of our integrity and devotion to making binary options trading safer and more pleasant.
CySec often issues warnings on unregulated brokers in order to protect customers from the scam. Such was the case of Chelestra Ltd, the company behind the LBinary that added bonus to the client’s account balance without written permission and misused client’s trust by managing the account without authorization. Even though this broker was not regulated by CySEC they still felt obligated inform the public about the scam. We reported about this case soon after we suspected that LBinary was a scam. More information about this interesting case can be found here.
All complaints about registered brokers here can be submitted here, simply by filling an online form with all available documentation attached.
Binary Options Regulation US
The USA is a large market so it is not surprising that binary options brokers were trying to offer their services for a long time, but US government decided to enforce various laws and directions in order to protect their citizens. Sometimes, their protection is so strong that it disables potential traders and lowers the liquidity.
CFTC Binary Options Regulation
Commodity Futures Trading Commission (CFTC) is regulating body for the territory of United States that takes care of transparent, competitive and open markets, meanwhile protecting funds, consumers and public from frauds. It also regulates binary options, following the instructions by Commodity Exchange Act. What is interesting is that it is not illegal for US residents to place their trades with offshore brokers, but it is illegal for those brokers to do business with US residents, or better, to offer their services in the US market. It is complicated, even if it seems simple. Brokers registered in other countries don’t accept US traders, as it is considered illegal, so traders can choose between few unregulated brokers who still accept them despite the great chance of being fined and Nadex, Chicago Mercantile Exchange and Cantor Exchange although the last one offers fewer options, with Nadex being the most popular.
Nadex, or North American Derivatives Exchange, is derivatives exchange for the retail traders and is completely regulated by CFTC. Nadex can be easily explained if traders imagine it like a bridge between them and those who offer binary options. Now, as in most cases, there is a toll to pay if one wants to cross the bridge, so Nadex applies various fees to all transactions – from trades to banking. Something like that is unheard of in most binary options trading markets.
Read more about it in our Nadex review.
CFTC sees binary options as predictions markets and is known for pressing charges against most acknowledged brokers just because they offer their services to US traders.
If US traders have any problems during their transactions, they can contact their platform provider. Nadex customer service can be reached via email, just like Cantor Exchange. CME customers can use telephone or email for reporting irregularities. All suspicious activities can be reported to CFTC, as well.
Binary Options Regulation South Africa
Binary options are very popular in South Africa, as South Africans also want to take advantage of this lucrative way of trading. One of the most interesting things is that companies with headquarters in South Africa are not allowed to provide binary trading service to users in South Africa
Binary options in South Africa are regulated by the FSB or Financial Services Board, special regulatory agency that controls all elements and participants in financial markets. The main role of the Financial Services Board is to maintain safe and reliable investing environment in whole South Africa.
Mostly forex brokers are regulated in South Africa – most popular is CMTrading.
FSB also provides support for traders who have been scammed by bad binary brokers. They can use one of the numerous contacts available for FSB customer support and even reach for their Consumer Education department that will provide traders with more detailed information about the topic they are interested in.
Find out more about binary options in South Africa.
Binary Options Regulation Canada
In Canada, binary options are considered somewhat of grey area and since May 2015 there aren’t any registered brokers. In the past, there were two regulatory bodies that monitored binary options trading in this country: Investment Industry Regulatory Organization of Canada (IIROC) that is enforcing the proficiency, business and financial conduct of dealer firms and Canada Securities Administrators agency (CSA) which is an umbrella organization for harmonizing and improvement of the Canadian market. It is important to make clear that binary options are not illegal but are defined as exotic options.
Yet, it still seems that Canada is not popular among brokers. The reason for that is probably that it consists of ten provinces and three territories and each of them has their own legislation which makes it harder for brokers to offer their services on the entire Canadian market. For that reason, Canadians mostly trade with regulated offshore brokers or unregulated brokers with a good reputation, even though Canadian authorities usually warn about unregulated brokers, but only because they are not regulated by them.
We can hope that in near future Canada will make some improvements when it comes to regulation. All Canadian citizens can complain about regulated brokers in Canada (in case there are any) to IIROC and CSA, and they should contact the offices depending on their residence province.
Binary Options Regulation British Virgin Islands
The British Virgin Islands is a British overseas territory mostly known for as offshore financial center. BVI is quite popular among financial companies as their banking laws are quite loose. Binary options are, just as is Forex, regulated by Financial Services Commission (FSC). FSC is more popular among forex brokers than binary options brokers, even though there are some brokers who have addresses in BVI but are regulated by other regulatory bodies, like ImperialOptions regulated by CySEC.
Binary Options Regulation Australia
Australian Securities and Investment Commission is defined as Australia’s corporate, markets and financial services regulator and an independent Commonwealth body. In Australia, binary options are considered financial product and according to the Commission, any entity that deals in, or provides advice about binary options to Australian investors must be licensed by Australian Finance Services (AFS), which is a part of ASIC.
Even though Australian customers may trade with European brokers (those regulated by CySEC), it is always better to use Australian broker if one is an Australian resident. Strict laws that are enforced on brokers registered in Australia are insurance for traders who want to invest safe and easy way. ASIC can retrieve their permission for binary options trading if they notice that a broker is a scam. The only broker regulated in Australia is HighLow, and as we haven’t received any negative comments we can say that they are a respectable broker.
In order to file a complaint about one of the brokers, ASIC requests traders to know the difference between various types of scams as they are not authorized to deal with all of them. Find more information about various scam types and how to report them here.
Binary Options Regulation France
When it comes to binary options trading, France is an interesting market. There are two regulating bodies: Autorité des Marchés Financiers (AMF) or Financial Markets Authority that regulates the stock market in France and Banque de France that oversights financial markets infrastructures, cashless means of payment and ensures security in a world of finances. Binary options in this country are defined as financial services.
Despite two regulating bodies, binary options trading is not completely regulated, but it is not illegal either. Brokers can register in France but, any brokers registered with other regulatory bodies inside EU are considered registered brokers in France as well. That is why it is always recommended that French traders trade only with registered European brokers.
AMF’s attitude towards binary options brokers’ advertising practices is somewhat hostile, considering they frequently publish blacklisted brokers. In September 2015, there were almost 250 brokers on the blacklist, some of them for the right reasons and some of them simply because they don’t have AMF’s approval. However, when visiting those broker’s websites, we found there are many brokers that are closed and most of them are not offering their services anymore so one has to rethink the way AMF updates their list.
But that is not the real reason we could say AMF is hostile: high taxes and fees are quite undesirable in the world of financial trading, so brokers prefer countries as Cyprus or Latvia. Other than that, French authorities established Jury of Advertising Ethics of the Authority of Professional Publicity Regulation (ARPP) that is an interprofessional body created in order to provide an ethical and professional environment in advertising, thanks to which broker can no longer use false advertising. The most popular broker registered in France is Banc de Binary.
In order to report scams and unethical business practices, simply fill the form available on the AMF website. Don’t forget to add all available documents, correspondence and print screens.
Our analysis of one of AMF studies can be found in the article about binary options scams.
France recently banned advertising of binary trading services.
Binary Options Regulation Italy
CONSOB is a regulatory body in Italy that reassures transparency and appropriate behavior by financial market participants, disclosures and of complete and accurate information to the investing public by listed companies, and that considers binary option betting. As they explained, binary options have a structure similar to betting, since they assure payment of the pre-set amount before the event occurs. Italian authorities are quite strict when it comes to binary options trading, and are ready to fine everyone who doesn’t obey the law with the amount as high as €500,000.
For example, in the European Union is quite common that every broker that has a license within the European Union is allowed to do business in any country within EU, but not in Italy. All licenses issued by other regulatory bodies, like CySEC or AMF, must be reviewed and approved by CONSOB in order to do business in Italy. As it was stated in Communication No. 12055030 of July, 2nd 2012:
… all subjects intending to provide investment services involving binary options to the (Italian) public must possess the necessary authorization issued by the competent Authorities.
Since the Italian authorities view binary options as gambling industry and have very strict policies when it comes to this industry, CONSOB even blocked websites belonging to brokers who were accepting Italian customers like EZTrader, BOcapital, StartOptions, AnyOption etc., and the list gets longer every day. It is not unusual that traders find out after days or months of trading that they can’t access their accounts since they have been blocked.
As FBO reported, EZTrader turned out to be a scam and, in this case, Italian government did well by prosecuting them.
Unfortunately, Italy tends to block even the fair and honest brokers which is not good for their business, but also removes the block as soon as the broker gets the license. The first broker that got the license was 24option .
This regulatory CONSOB accepts reports only by filling the form available on their website.
Binary Options Regulation New Zealand
New Zealand is one of the few countries that regulates the binary options trading industry. Financial Markets Authority is a financial services regulator in New Zealand. Many platform providers are based in New Zealand, and their Financial Markets Authority is conducting Financial Markets Conduct Act. All brokers first must register at Financial Service Provider Register in order to do business in New Zealand. In order to receive the license, the broker must have a physical office and staff in the country, and obey many rules and laws such as that client’s funds and company’s funds must be completely segregated. They also have to be members of an external Dispute Resolution Scheme, which gives traders additional protection. BinaryTilt is a broker licensed in New Zealand. New Zealand customers cannot trade with FMA regulated brokers.
FMA regulated brokers:
New Zealand also blacklists the brokers who don’t have a license or are prone to malpractice. One of the cases like that was that of broker under the name of OptionsRider. FMA stated that the broker claimed to be registered with a nonexistent regulatory body in New Zealand. Such behavior is considered deceiving and is punishable by law. What is even more surprising is that the broker completely ignored the fact that everyone can easily check if a company is registered or not with Financial Service Provider Register simply by typing the unique code assigned to each company. OptionRider’s code was nonexistent. After short research we found out that there is a big chance this broker is a scam since users described their customer service as almost not existing, there are no owners mentioned on the website and the list of dishonest practice goes on and on. This only proves how important it is to check all the details provided by the broker before making a deposit. We strongly recommend not trading with this broker, but choosing one from Fair Binary Options top broker’s list instead.
FMA is always trying to protect public from scam so there is an online form on their website that should be filled in case one suspects there is fraudulent activity going on. Make sure to upload all evidence available as it makes your complaint look more serious.
Binary Options Regulation the UK
Binary options industry in the United Kingdom has been experiencing some changes recently. Since 2005, it has been considered betting and was a category under Gambling Act. That didn’t do much for the reputation of this alluring trend in the trading industry, so the UK government decided to define binary options as financial market derivative and put it under the regulation of Financial Conduct Authority. There were a public hearing and a thorough research under the supervision of a judge in order to decide whether binary options should stay in the domain of gambling, or be transferred into the sector of financial markets. At the moment, brokers still get their licenses issued by Financial Conduct Authority, but the final decision can be expected in early 2016.
Since the European Union is treated as one market, brokers regulated with other European regulatory bodies can offer their services in the UK as well, but keep in mind that it might change in 2016 if UK government decides to follow the example set by Italy. It is expected that in the future FCA will be the one providing licenses for the brokers, and Financial Policy Committee will supervise if all the brokers follow the necessary legislation. FCA issued licenses for several brokers:
It is important to emphasize that at the moment, FCA is not the official regulatory body, as the entire industry in the UK is in a transitional period. For that reason, traders cannot expect protection as in other cases with regulated brokers. FCA currently has no authority over prosecuting or penalizing foul brokers. As already mentioned, this problem will probably be solved in 2016.
Even if FCA is not the official regulatory body, traders can still report bad brokers, but keep in mind that FCA can only revoke their license, but can’t fine them at the moment. Here you will find detailed steps what to do in case of a scam, the first step being stop sending money. This regulatory body even gives useful advice on how to avoid being scammed, and what to do once the scam is reported.
Binary Options Regulation in Belize
One of the most popular countries among binary options brokers is Belize. Binary Options in Belize are regulated by International Financial Services Commission and are defined as trading in securities services. Because of some bad experiences in the past, Belize Government passed Offshore Banking Act in 1996 and Money Laundering Prevention Act in order to ensure that the country’s financial institutions are used for disguising illegal activities, as Belize is trying hard to create a reputable business environment.
In order for a broker to receive Belize license, they must be registered as a company in Belize, even though they don’t have to have physical offices in that country. Interesting thing is that regulated brokers aren’t allowed to offer their services to Belize residents. There are two exceptions to this rule: bank licensed under the Banks and Financial Institutions Act (CAP. 263) or the International Banking Act (CAP. 267) or the Government of Belize or a public statutory corporation wholly owned by the Government. The broker must conduct their business in another currency and basically, must follow IFSC’s set of rules that can be read here.
Some of the brokers registered in Belize are:
- Banc De Binary
In case of any difficulties, traders can always contact IFSC using the online form that can be found here. All regulated broker can be found on their web page, on the List F. Keep in mind that name of the broker and company behind it aren’t always the same. As many other regulatory bodies, IFSC also releases information on brokers who lost their license, so be sure to follow their web page in case you trade with broker registered there.
Binary Options Regulation in Vanuatu
Recently, Vanuatu Financial Services Commission has become increasingly popular among binary options brokers. Vanuatu is a small island state formerly known as New Hebrides Islands that provides numerous benefits for financial business, but low tax rates as well. VFSC provides fast registration accompanied by low expenses so it’s not surprising that more and more brokers are choosing this regulating body. This regulatory body has low initial capital requirement compared to many other regulatory bodies – only $2000. When registering with VFSC, the company is not obligated to have physical offices in the state or local staff.
Unlike CySEC and some other popular regulating bodies VFSC doesn’t provide any information about traders support. There is a contact form available on the website, but it is important to mention that this regulatory body seems more business-oriented than dedicated to protecting the traders.
Traders can contact this regulatory body via online form that can be found here.
Binary Options Regulation in Japan
Binary options brokers are regulated by Financial Futures Association of Japan (FFAJ). This type od financial trading has been under the regulations since 2013, when FFAJ created an extensive set of rules that apply to all regulated brokers. As always, not all brokers that provide their services in Japan are regulated, but there are very few markets in the world that managed to prevent unregulated brokers from operating.
Binary trading in Japan is somewhat different than in the rest of the world. The lowest expiration time is 2 hours, which means that there are no fast options to be traded with regulated brokers. Fast options are usually riskier, but also more profitable for the trader.
Transparency in determining the final price is imperative, so Japanese agency created a set of rules that apply to this part of binary trading. Also, Japan is not very keen to bonuses. FFAJ believes that high promises of additional bonuses can significantly decrease trader’s possibility of making a good judgment. Affiliate advertisements are preferred, but only if they don’t contain cash-back promises. All advertising material must be carefully managed in order not to deceive traders that binary options are risk-free, so all types of gifts etc. are not welcome. The brokers are obligated to present prices based on payout amount. Unregulated brokers don’t have to follow this legislation, but on the other hand, they can face various fines.
FFAJ can be reached via contacts listed on the Japanese version of the website.
Binary Options Regulation in Spain
Financial trading in Spain is regulated by National Securities Market Commission (CNMV). It has been established in 1988, as part of a great reform of Spanish financial sector in order for Spanish market to be compatible with EU legislative.
As in many other European countries, binary options are not regulated by any law, and CNMV is not providing any permissions for binary brokers. But, as Spain is part of EU it can be considered that it is simply because of MiFID and CySEC that regulate them on much higher level. All brokers licensed by CySEC can legally operate in Spanish market, but CNMV still publishes warnings about scams on a regular basis.
We can expect to experience this situation more and more often, as Eurozone is usually considered to be a single market. It still remains unclear whether CNMV has any legal power when it comes to prosecuting binary brokers, as binary options are not regulated by any laws on the territory of Spain.
In the case of any problems, traders can report the scam broker to the CNMV by using the online form available on the website. Keep in mind that the form is for Spanish citizens only, as the ID number is required in order to file a complaint.
Binary Options Regulation in Israel
[Update] ISA bans Binary Options
According to reports sent by ISA in MArch, 2016, all types of binary options trading are banned in Israel in a way that brokers cannot offer this service or use advertising towards Israeli customers. However, the question of doing business between Israeli citizens and offshore brokers remains unanswered, as due to strict regulations almost no broker wanted to be licensed by ISA anyway. Also, the status of companies who operate in Israel, but offer their services outside the state of Israel and are regulated in other countries remains unsolved.
In their publication, ISA mentioned how binary options should be defined as gambling and not as an investment (which can make traders wonder how come there are so many successful strategies available in order to research the market and make a proper decision).
Israel is one of the countries that takes binary trading very seriously, especially after raising the tax on capital gain for 25% which forced many investors to look for their luck elsewhere. Binary options were the logical choice.
Binary trading in Israel is regulated by Israel Securities Authority (ISA), the government body that was established in 1968. The role of ISA is to prevent frauds, insider trading, and other suspicious and possibly illegal activities that can harm Israeli investors. It is important to note that ISA is not very favorable towards binary trading, as many believe that binary trading caused the collapse of Tel Aviv Stock Exchange after capital tax raise.
Whatever their opinion is, the fact is that binary options brokers are regulated in Israel which makes trading completely legal. The new law was implemented in March 2015, which means that all brokers who want to provide their services legally in Israel must obtain a license. ISA goes much further than many other regulatory bodies, as brokers have to update the status of their clients regularly, provide monthly, quarterly and yearly reports and follow a complicated set of rules in order to maintain the licensed status.
Binary Options Regulation in Malta
Binary options trading is very popular in Malta where it is regulated by Malta Financial Services Authority (MFSA). When it comes to Malta, binary trading is completely legal and regulated, and all companies who wish to provide such services can apply for a license.
There are three important categories when it comes to binary trading in Malta:
- Category 1 license (17,000 Euros in capital) – allows brokerage activities, does not allow holding of client’s funds
- Category 2 license (125,000 Euros in capital) – allows investment services and holding of users’ funds, but denies trading on company’s account
- Category 3 license (730,000 Euros in capital) – allows investment services and holding of users’ funds, allows trading on company’s account
Binary brokers in Malta have to wait in average 6 to 8 months to obtain their license while annual license fee costs between 3,000 and 10,000 Euros. Brokers also have to have offices in Malta and two senior managers, with investment opportunities offered only from Malta.
MFSA also has an onlinehttps://www.mfsa.mt/about-us/contact/ form for traders who feel they have been scammed by their binary broker. MFSA is asking of traders to add as many details as possible in order to provide the best assistance possible.
Binary Options Regulation in Russia
Binary options trading is very popular in Russia, and there are many brokers present on the Russian market. It is important to notice how Russian Central bank (CBR) is in charge for supervision of all financial products present in this country.
There is also a regulatory body called CRFIN, Centre for Regulation in OTC Financial Instruments and Technologies. Russian licenses are provided for specific types of trading, and there is no possibility for a broker to offer forex and binary trading with a single license, but must have both.
In order to get a license, binary brokers have to deposit 2 million Russian Rubles and have a minimum capital requirement of 100 million Rubles (1.2 million dollars). All officers, directors and other significant employees are obligated to have a proof of relevant experience in the field and clear criminal record. The broker also has to show a business plan but is not obligated to have shareholders physically present in Russia.
Traders who find themselves to be in contact with a fault broker can contact CRFIN easily by filling the online form available on the website. There they can attach all necessary files and explain their situation.