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One of the best ways to trade safely is to make a clear distinction between regulated and unregulated brokers. Unregulated brokers are brokers who don’t possess a valid license by financial regulators or government agencies in charge of regulating binary options trading. We do not recommend trading with unregulated brokers, as we don’t believe they offer proper security for traders and their money. It is always better to choose a regulated broker.
Brokers in the list below are unlicensed binary brokers.
Many traders are wondering why is it so important to make a deposit with a regulated broker, especially when unregulated broker offers higher bonuses or better benefits.
The answer is simple – regulated brokers are obliged to follow all legislation and regulatory framework provided by the regulatory body. This means that customer protection is on the much higher level, as government agencies are always looking for a way to create safe conditions for their citizens. This leaves very little space for false advertising, manipulation, and other unethical business practices, as brokers can easily lose their license.
Regulated brokers are serious companies, while when trading with unregulated brokers, there is a higher chance of encountering a scam or an unprofessional company. Trading with regulated companies gives users the opportunity to trade in safe conditions from the very start.
Unlicensed brokers don’t necessarily have to be scams, but unregulated companies usually have fewer obligations towards the user. When it comes to regulation, binary options are no different than other industries – the unlicensed status usually means higher risk.
And while it seems that it is all worth it due to high payouts promised, traders must know that they are exposing themselves, their data, and their money to companies that are operating ‘under the radar’ and with often questionable terms and conditions. This means, that rules of binary options trading can change anytime. Also, regulators are never keen on unregulated binary brokers, and they are often publishing warnings regarding their operations in certain territories. It is not uncommon, that an unregulated broker simply disappears from a certain market due to warnings, and traders are left without any explanations or their money.
FBO’s general experience is that unregulated brokers are usually more prone to unprofessional behavior. Unprofessional business practices are those that put traders in unfavorable position, often without them even knowing what is going on.
Unethical business behavior is sometimes hard to recognize as it is disguised by flashy banners and great promises. Traders get so impressed, it takes some time for them to realize they were victims of sneaky terms and conditions, spam, cold calling and pushy ‘personal’ brokers.
When it comes to unlicensed brokers, it often happens that they either add unauthorized bonuses that traders don’t want or simply have unfavorable bonus terms that traders are never warned about. This makes it almost impossible for a trader to withdraw their money, and they are literally forced to trade with the broker, hoping they will reach very high trading volume one day and get their money back. On the other hand, regulated brokers follow certain regulatory rules about bonuses and are obliged to warn trader about all conditions and possibilities. Find out everything about binary options bonuses.
This problem is frequently seen with unlicensed brokers. As the trader has no legal protection in form of a regulator, the broker is not processing withdrawals and is always trying to find an excuse. Instead of promised 5 working days, sometimes it takes months and a lot of effort for traders to get their money back, even when all terms are met.
Auto trading is a very popular way of trading when robot places trades instead of the trader after fast and precise market analysis. However, some unregulated brokers have their own robots that purposely place unprofitable trades or use this service without traders’ approval.
Same goes with ‘managed’ accounts when, alleged senior brokers are placing trades instead of the trader and are promising high success rates, but are losing money instead. They often claim that they have permission to trade instead of the trader, but rarely offer any proof. Sometimes, traders lose their money overnight and don’t understand what happened, as they never gave permission for these types of trading.
Unlicensed brokers sometimes use stolen customer data, or can easily send traders’ personal information such as phone number or email to other companies. This practice, that is extremely unprofessional, brings trades into unpleasant situations, and they no longer feel safe with their broker.
Personal data is private and confidential, but practices like this are ruining the reputation of all brokers – regulated and unregulated alike. Read more about cold calling and stolen data in binary options.
Binary options regulation highly depends on each and every country. There are many regulators all over the world, but two are most important: Cyprus Securities and Exchange Commission (CySEC) from Cyprus that is most popular among brokers who offer binary trdaing in Europe, and Commodity Futures Trading Commission (CFTC) that is in charge for binary options regulation in the US. US traders should know that binary options in the USA are only allowed via regulated exchanges, such as NADEX.
Even though CySEC is well-known, there are also local regulators in every country. For example, in France, binary options are regulated by Autorité des marchés financiers. Some of other regulatory bodies in the EU that are active in the field of regulations are Italian CONSOB, FCA from the United Kingdom, and Finanstilsynet from Denmark.
Binary Options are regulated in other parts of the world as well. In Australia, traders can rely on Australian Securities and Investments Commission (ASIC), and traders in New Zealand can trade with brokers regulated by Financial Markets Authority (FMA). In Canada, binary options are regulated in every of territory and province, with the main regulatory body for financial regulation being Investment Industry Regulatory Organization of Canada (IIROC).
All these regulatory bodies are regularly publishing information regarding latest unregulated brokers that appeared on the market and are focused on protecting the public from unlicensed companies.
Of course, this doesn’t mean that all unregulated brokers are unprofessional. Some of them are good in many aspects but are simply missing the license. However, we at Fair Binary Options consider regulated status more important than ever, as we put our readers in the first place. Many readers who reached for our customer support experienced issues when trading with unregulated brokers. For this reason, we simply can’t support unregulated brokers.
Regulation has many benefits for both brokers and traders. By gaining a license, binary brokers are becoming legit companies that are trustworthy and reliable. Traders get additional insurance, and can always count on regulator’s help. Thanks to regulation, both sides know what to expect, and what their obligations are. There is no space to maneuver with bad business practices.
Here are some examples of obligations of regulated binary options brokers that are promising fair approach towards users:
Unregulated brokers are not obligated to follow these rules by any means. It all comes down to good will and ethical code of conduct. By choosing an unregulated broker, traders expose themselves (and their money) to much higher risk that rarely pays off. Nothing stops unregulated broker from spending traders’ money on a company trip, or from adding bonuses with impossible terms and conditions. They can use any tactic they like with their customer support and simply disappear over night.
Also, some regulators (like CySEC) have investor compensation fund in a specific amount in case the trader has difficulties withdrawing the money because the broker cannot meet all the obligations towards the trader. This means that the broker regulated by CySEC is not able to return funds belonging to the trader that the broker still holds in order to provide investment services or return financial investments that belong to covered clients and company holds on its account. Find out more about CySEC Investor Compensation Fund.
Traders can also report any form of unprofessional behavior to the regulator, while in the case of unregulated brokers they are left on their own.