Regulations Start for Binary OptionsWith the advent of binary options in 2008, there is no doubt that it has become popular ever since. But because binary options are relatively new, few regulatory bodies were set for managing and assuring safe trade of binary options online.
Recently, one of the top binary options brokers, Banc de Binary (BdB), has quit the US trading scene temporarily. BdB is working out with the U.S. Commodity Futures Trading Commission to make it a regulated broker in the US.
The Move to Regulation
Here is BdB’s official statement regarding the Commodity Futures Trading Commission:
Banc De Binary has announced that as of January 25 2013 it is in talks with the CFTC in order to obtain regulation for its operation as a binary options exchange in the United States.
The New York headquartered company currently provides an online binary options platform where investors can trade in the direction of over 200 assets. The CFTC approached Banc De Binary after the company became the first EU regulated binary options brokerage (CySEC license 188/13).
In accordance with CFTC requirements, Banc De Binary will not be accepting new US clients during the course of negotiations. Customers from abroad and existing US customers will still retain full access to all company services. Since its founding in 2009, Banc De Binary has complied with all federal and state laws regarding banking and compliance procedures. However specific regulation for binary option trading has not previously existed.
The company has long voiced its desire for industry regulation so as to better protect traders, and has said that it would comply with all applicable procedures. The introduction of regulation in the EU, and now in the US, legitimizes binary options as a financial instrument in their own right and adds credibility to this relatively new and quickly growing industry. The acquiring of a license is recognized as the guarantee of a firm’s professional standards and financial security for clients.
Banc De Binary made the decision to begin operating only in regulating countries in order to continue leading the binary options market and convert binary options into a viable financial product in the banking world. It looks forward to working with regulators worldwide in its commitment to providing a quality investment service to all clients.
Unregulated Brokers Can Break You
Unregulated binary options brokers aren’t illegal, but trading with them entail risks such as no security over your funds; as opposite to a regulated broker, a trader’s account and the company’s operating funds are separate from each other therefore safeguarding your funds.
Once a broker has registered and regulated by the government, it will be under the watch of their corresponding governing body, thus ensuring safety and security of trading with your chosen trader.
Regulating Bodies of Binary Options
There are different regulating bodies that govern binary options. However, in May 2012, the Cyprus Securities and Exchange Commission (CySEC) announced binary options as a financial instrument, therefore dealing trades through binary options are to be regulated if they want their platforms to be enabled to trade.
Regulating bodies from different parts of the world do not declare binary options the same as what CySEC did; others classify binary options as gambling platforms due to the nature of its payout. Another aggravating factor of being labelled as a “gambling platform” is due to the fact that you really don’t need any knowledge of the stock market, at all. On the other hand, in the UK, binary options is considered as fixed odds betting. Depending on your chosen binary option platform, there are only two outcomes of each trade.
The need for more regulating bodies for binary options is called for due to its continuous popularity waging over the Internet. A lot of binary options brokers are promising higher payouts and easy to win trades; but no one can alter the fact that binary options are a high risk investment platform. Definitely, no one can guarantee a hundred percentage of winnings.
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