Is It Legal to Trade Binary Options?
In general, binary options trading is legal, providing the broker you use is regulated and offers transparent terms. Several countries view it as legitimate and govern this investment instrument through their regulatory agency. Countries where binary options trading is regulated includes the USA, UK, New Zealand, Australia, Malta, Cyprus and Japan.
In recent years, binary options trading has become a popular investment instrument for traders who want diversification in their investment portfolios. This is mainly due to the fact that the trading premise is simple and easily accessible to traders via many online trading platforms. With many beginners emerging in this market, the questions most often asked is whether binary options trading is legal or not, and if it is, how it is regulated.
In EU countries, there are different regulations that govern trading binary options. License passporting is however a common technique used that allows companies regulated in one country to trade in other countries. The mechanism for this was established under the MiFID.
High interest in binary options trading results in tight regulations
Binary option trading is fast becoming a favorite investment option for many investors. This is mainly due to low initial deposit requirements, the simple trading premise and the market’s high and fast payouts. Increased regulations played a big role in cementing it as a respectable and credible trading practice. Regulatory agencies regularly monitor trading platforms and take action when issues emerge. One example of this was recently reported by Finance Magnates and involved unregulated, questionable companies luring investors in.
When looking for online trading platforms, you’ll likely come across many binary options brokers who proudly proclaim they are regulated and licensed by the industry’s governing bodies, and rightly so. Regulatory bodies have to oversee the trading platforms and look out for consumers’ best interest, which in this case is the invertors. They set regulations and rules to protect traders to ensure they get fair market prices and are able to withdraw their winnings quickly and easily. The FCA for example recently announced they were contemplating taking action against unauthorized binary options platforms in the UK in order to improve the protection of traders. As the financial regulatory authorities only grant licenses to brokers who follow the rules, traders can be confident of being protected when trading on these platforms.
The legality of binary options trading differs for different countries. In some, brokers are legally required to be regulated, while in others, it is only a recommended preference. This does however encourage many brokers to comply with the requirements and become licensed. Before engaging in binary options trading, it’s essential that you know what your country’s specific set of regulations are, as this will vary depending on the country and its specific requirements and legislation. Below are some of the reasons why it’s always a good idea to only use regulated trading broker to invest in binary options:
1. Company and customer assets are separated to safeguard the traders’ money in should something happen to the broker.
2. Brokers have an interest in trader’s success as traders buy options directly from the broker.
3. Investor protection against fraudulent activities.
4. Compliance with strict guidelines and rules.
5. Brokers guarantee sufficient funds to support their responsibilities towards investors.
IQ Option is a leading binary options broker that is regulated by the CySec. IQ Option also provides traders with an intuitive dashboard that makes trading simple and easy.
When deciding on which binary options broker to use, IQ Option is a good place to start as it is widely considered as one of the most innovative and reliable online trading platforms available in the binary options industry. Regardless of their experience level and skills, traders are offered all the essential features and tools required to start trading immediately. These include an intuitive platform, a demo account, and a wide variety of assets to choose from. Seasoned traders are able to use many of the advanced features, while beginners tend to love the user friendly interface of the platform and the wealth of educational materials that is made available. Novices can also begin with a low minimum deposit of only $10 and, if successful, receive payouts of up to 91%.
IQ Option is also one of the very few brokers that have a truly free demo account available. No money has to be deposited before access is granted to the demo account and opening an account is simple, easy and fast. The platform also offers many charts with a rich set of information and various viewing options that can easily be maximized. Withdrawing and depositing funds is also easy and convenient with a wide range of payment options offered.