Is Binary Option Trading Legal and Regulated?
Even though Binary Options Trading goes on worldwide, there are regulations involved in various countries. Therefore, Binary Option Trading has raised issues about its legality and registration process in Europe but especially in the US. Lately, there has been much discussion of the legality of the trading process particularly for those United States clients, who are interested in trading in Binary Options.
While there is no law currently in the United States that states the process of Binary Option trading may be illegal. And because of this, traders from the US may experience problems when registering with a Binary Option broker based in Europe or the United Kingdom.
The challenge comes from the variety of assets offered by Binary Options brokers in the US. These investment opportunities do not fit under one single regulatory agency in the US. However, the European Union (EU) has only one regulatory agency for financial investments and it recently offered regulation to include the Binary Options Industry.
Since 2013, the country of Cyprus has aggressively sought the business of many Binary Options brokers and encouraged them to submit their application to the Cyprus Financial Regulator (CySec) for regulatory approval. And many Binary Options brokers are headquartered in Cyprus due to its favorable corporate tax laws which allow companies to keep more of their profits without having to pay higher company taxes. The requirement set by CySec and the EU that includes a lengthy application process such as a fee and a review in order to be granted a broker’s license.
Offshore Jurisdiction Registration
The process of getting the Binary Options business licensed and authorized by the Commodity Futures Trading Company (CFTC) is very difficult and complex. Most Binary Options companies are registered under the jurisdiction of any other country.
License Is Granted Based On a Contractual Agreement
Trustworthy Binary Options brokers operate with valid licenses and the licensees are granted based on a contractual agreement that the broker will be compliant with specific rules and regulations. These rules consist of clauses that define the importance of processing payment withdrawals in a timely manner when requested. These rules entitle the brokers to be transparent about the integrity of the price quotes for the underlying assets being traded on the market.
If the trading platforms are going to work against these rules and if anyone falls victim of business misconduct, then they may make a formal complaint against the company. It will then likely lead to legal prosecution according to the laws of the jurisdiction which the trading platform is to abide by.
International-Financial Oversight Commissions
Several jurisdictions in different nations regulate the licenses offered for the trading platforms in accordance to their respective financial oversight commissions. And it is best to trade on Binary Options platforms that are licensed or regulated by one of available commissions. Any trading platforms which obtain licenses from these bodies are obliged to operate within the jurisdiction of these commissions.
Brokers who are unable to obtain licenses from these jurisdictions may not be in a position to allow traders from other countries such as the United States or Italy. So if a trading platform or corporation excludes clients from a specific country, then it just means that company is trying to be in compliance with regulations. Thus, the legality of Binary Options trading is dependent upon the regulatory trade laws that govern the nationalities and related jurisdictions of the company and the client.
The great news is that if the day trader have an IP address from an area within the jurisdiction of a trading platform’s authority then you should be able to register with the company and start trading immediately.