Binary Options regulation – Why regulated brokers matter

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

Regulation

The Evolution of Binary Options Regulation

Regulation is one of the most widely discussed issues amongst binary options traders, and often plays a key role in selecting a broker. For those new to the markets, it is used as a yardstick, a way to sort the wheat from the chaff when picking professionals to work with.

Despite confusion surrounding this, it is important to point out at the start that regulation is an advantage, not a necessity. Like the forex industry before it, the binary options trade will take some time to become fully regulated, yet it has certainly made significant advances in recent years.

Indeed, today one could arguably state that most brokers have sought or are seeking a licence from one of the main regulators, such as the Cyprus Securities and Exchange Commission (CySEC), and the British Financial Conduct Authority (FCA). In doing so, they are taking an important step towards increasing investor confidence in them.

On this note, it’s a good idea to begin this article by exploring why regulation matters…

Why Binary Options Regulation is Important

Let’s start with the basics: defining what regulation isn’t. It is not, as is often believed, a measure of legality or otherwise. So, why bother with it at all? The answer is twofold.

Firstly, markets are better able to function with a clear set of rules and regulations. Created by experts, these may not be legally binding, but they are essential to ensure physical rights, underpin transactions, and safeguard fair competition.

Secondly, they offer protection, for companies and their clients alike. The rules guarantee the safety of those involved, and help to mitigate broader market failures in the most competitive industries. On the part of the consumer, they shield them from abuse, scams, and fraudulent activity.

The History of Binary Options Regulation

Despite the importance of regulation, it has not always existed. Options trading in a broad sense has been around since 1971, when the Chicago Board of Trade formed the Chicago Board Options Exchange. In the earliest days, it was an investment vehicle utilised by only the most elite investors, and was thus minimally regulated.

As the decades passed, this began to change. Regulation improved, and the quality of options transactions increased. A body known as the Options Clearing Corporation (OCC) was formed, and this helped to ensure that the assets that investors bought and sold were as claimed. In cases of serious malpractice, this organisation even had the power to implement bans.

In time, binary options became more user-friendly, yet they remained the product of an exclusive market, where transactions were still conducted over-the-counter. Regulation did exist by this point, but was minimal.

2007 marked the beginning of a real change in attitude. At this time, the OCC made the decision to enable binary options to trade on the major stock exchanges. This was legalised by the U.S. Securities and Exchange Commission in 2008.

Binary options growth

As a result, the number of binary options brokers boomed, and an increased number of investors began to trade them. This trend was only reinforced in 2020, when the odds, risks, and fixed rewards of these instruments was revised to make them more appealing. Now, they are the fastest growing and most popular segment within the entire investment industry.

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

Regulation has increased in line with this, and today CySEC is the main regulator of binary options. A number of other bodies also exist around the globe, each of them dedicated to creating a safer trading environment for all.

The specific rules imposed by various bodies varies from country to country, with each nation having its own laws and restrictions. Brokers must be regulated by their national authority, and because the majority are located in Cyprus, CySEC is at the forefront of this movement.

Regulators

As it stands, the key regulatory bodies include:

CySEC

CySEC is the body that the majority of brokers are regulated by, because it’s cheap and tends not to impose overly restrictive conditions. Although it has been accused of being too easy on brokers, there are examples of both warnings and fines having been issued where misconduct or misbehaviour has occurred. There are those who feel that they should be more decisive in taking action, yet where a broker has CySEC regulation, we’d argue that you can still have confidence in using them.

FCA – Financial Conduct Authority

The English-based regulatory body is known as the FCA, and is famed for imposing strict conditions on brokers. Professionals regulated by them, such as ETX Capital, are thus a safe choice, and will have had to work hard to prove themselves worthy of their licence. Should those using an FCA regulated firm find themselves unhappy with the way a complaint is handled, they also have the British Financial Ombudsman Service to fall back on.

Financial Industry Regulatory Authority (FINRA)

FINRA are a U.S. based regulatory body, which investigate the activity of brokers through their complaints programme. They have a significant amount of power when it comes to addressing abuses, ranging from the imposition of fines to suspensions.

Other American watchdogs include: the Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission (CFTC) – who regulate Nadex and the CBOE, and the National Futures Association.

These are only three of the multiple bodies around the world, which shows just how far binary options trading has progressed in its quest to become better regulated. Although it is not an infallible measure of trustworthiness, choosing a regulated broker should always be the preferred option, conferring greater safety, greater reliability, and greater protection. Full regulation around the world remains a goal for the future, yet considering the steps already taken, it seems an eminently possible ambition.

Regulated Brokers

Not all of the binary options brokers we recommend are regulated, but a fair few of them are. Regulation alone does not create trust, but it certainly is an important consideration. What does it mean to say that a binary options broker is “regulated”? Quite simply, it means they are licensed by a relevant financial authority to operate as trade brokers. This is not the same thing as simply having a license to do business in their countries!

A lot of brokers will refer to a business license as if it is the same thing as regulation, but it is not.

Here are the regulated binary options brokers that we recommend:

  • 24option: USA traders are not accepted. Licensed and regulated by CySEC, license #207/13. This was one of the first binary options brokers we ever recommended. Trade High/Low, One Touch, Boundary, and Short Term options, and take advantage of a lot of great training resources and trade tools.
  • MarketsWorld: USA traders ARE accepted. Licensed and regulated by the Isle of Man Gambling Supervision Commission (GSC). License issued 6 April 2020. This is a unique binary options site where you can trade as little as $1. It does not get more flexible than that. They also offer extremely competitive returns.
  • NADEX – 100% legal and regulated by the CFTC. U.S. Citizens only. (See my NADEX fact sheet here. If you are concerned about getting ripped off by a scam broker then you should open an account with NADEX and learn how to trade there. Full regulation by the USA’s CFTC.
  • IQ Option: USA traders are not allowed. Licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC), under license #188/13. Additionally, IQ Option has reached out to financial authorities in almost all the member states of the EEA and has informed them that they offer services to residents of those states. IQ Option was not only one of the first binary options brokers to get regulated, but is also one of the first to be dedicated to working closely with financial authorities throughout Europe. IQ provides plenty of trade types and offers some of the most comprehensive training resources in the industry.
  • BinaryRobot365: USA traders are allowed. Licensed and regulated by CySEC, license #216/13. This binary options robot allows you to trade High/Low, Boundary, One Touch, and Short Term trades with a huge number of brokers. Check out their site for amazing member benefits.
  • Binary Mate: USA traders are allowed. Licensed and regulated by CySEC, license #092/08. Trade High/Low, One Touch and 60 Second options. Their platform also includes Option Builder and Pro Option. Resources include webinars, video tutorials, a guide to market indicators, and more.
  • BOL Financial: USA traders are allowed at this infamous sportsbook licensed and regulated in Curacao. This broker offers High/Low options and 60 Second options, amazing resources, and a ton of exciting promotions and bonuses.

Just who are these financial authorities, aka the Regulators?

  • Cyprus Securities and Exchange Commission (CySEC): This is the financial regulatory agency of the Republic of Cyprus where numerous binary options brokers are based. They operate under the European Markets in Financial Instruments Directive (MiFID). MiFID regulates investment services across the European Economic Area (EEA) which includes the EU and a few other countries. CySEC’s requirements for regulation are a little looser than a lot of other European financial regulators, but the fact that they operate under MiFID means that customers throughout Europe can trade on licensed sites and enjoy CySEC protection.

  • Isle of Man Gambling Supervision Commission (GSC): This is an independent corporate body founded in 1962. The commission protects gamblers online by ensuring that services offered by license holders are crime-free, legitimate, and fair. You may be familiar with the GSC if you have ever played at online casinos; the popular casino PokerStars is another license holder which is regulated by the GSC. While binary options trading is an investment activity, it carries a high element of risk, which means that it overlaps with the gambling industry. This is why the GSC is a suitable regulatory agency.
  • Malta Gaming Authority (MGA): Like the GSC, the MGA is an independent regulatory body responsible for overseeing and governing online gaming activities as well as traditional offline gambling in brick-and-mortar establishments.

Other key players:

  • US Securities and Exchange Commission (SEC): This is a financial agency in the USA responsible for enforcing federal securities laws, regulating the industry, and overseeing the stock and options exchanges in the country.
  • US Commodity Futures Trading Commission (CFTC): This independent regulatory agency was established in 1974, and regulates the option and futures markets in the USA.

While you are not going to see binary options brokers regulated by either the CFTC or SEC, you will see their names plenty. They don’t take too kindly to binary options brokers because of the huge quantity of scams out there. This unfortunately causes them to shut out legitimate companies from doing business with USA traders as well.

Benefits of Regulation

Let’s talk about the benefits of dealing with a regulated binary options broker. Why is it important? The main reason to do it is because it can provide you with confidence and trust in your broker. Each broker that is regulated by CySEC or another financial authority is meeting the stringent requirements to hold a license. Those requirements protect you, the trader. They ensure you are being offered a quality product and that the market prices you are receiving are fair. They also ensure you will receive your winnings in a timely fashion.

Disadvantages of Regulation

Are there any drawbacks to regulation? Unfortunately, yes. Despite the fact that regulation can be a great asset which protects the trader, it can also make it impossible to trade if you happen to be located in the USA. CySEC is particularly strict about this, and will not permit their regulated brokers to offer services to USA customers at all.

This all has to do with regulations by the CFTC and SEC. In theory, those regulations should only stop US traders from dealing in currencies and commodities on binary options platforms (not stocks and indices), but the CFTC has dealt pretty harshly with some legit companies in the past. As a result, most regulated brokers err on the side of caution. That is why the only binary options broker on the list above that allows USA traders is MarketsWorld, which notably is not regulated by CySEC.

What do we recommend if you are a USA trader? Thankfully there are some great binary options brokers out there that are intent on continuing to offer their services to traders in the US. Some of these include unregulated brokers like Boss Capital, Redwood Options, and CherryTrade. And do not forget that you can always trade at MarketsWorld, which is a great choice anyway, since they offer such flexible services.

No matter where you are located, there are a handful of excellent websites where you can trade binary options online safely—regulated or not. Check out our list of Top Brokers and click through to view detailed reviews on each. Happy trading!

Is Stockpair Regulated? Stockpair Review – Regulated Binary Options Broker

IMPORTANT UPDATE AND WARNING : We have received complaints and read many negative reviews on the internet about StockPair possibly using indecent practice towards traders. Although StockPair is regulated, we can not recommend opening a trading account with them.

StockPair Binary Options Broker – Regulated or Not?

The broker you choose for your online trading purposes matters a lot in what impression you will get from your trading experience eventually. No matter how predictable the market conditions are, a bad platform and badly managing broker can ruin the things for you. This is why you always choose a broker after thorough research. Another one of the most important points is to pick a broker that gets regulated by a renowned authority. Stockpair is fully regulated by CySEC and also licensed by the Belize International Financial Services Commission for trading securities. Any traders can trust this broker for making trades and depositing their money in the online account.

StockPair Website

Stockpair has made a lot of information available at its website to help new traders not only understand what binary options trading is all about but also get a hang of the trading platform from Stockpair. Stockpair stands proud with its own take at binary options trading with a trading style called Kiko. Kiko is a unique method of trading binary options where the trader does not have to choose any expiration time. The trader only makes a prediction that a certain asset will hit a certain price level, which could be a higher or lower point from the current price.

StockPair is a CySEC and IFSC Regulated and Licensed Binary Broker

StockPair – AUTHORIZED AND REGULATED BY THE CYPRUS SECURITIES AND EXCHANGE COMMISSION UNDER LICENSE NUMBER 229/14

StockPair is also authorized and regulated by the Belize International Financial Services Commission: License No. IFSC/60/346/TS/14

stockpair.net Regulation Screenshot StockPair – Belize International Financial Services Commission (License No. IFSC/60/346/TS/14)

Binary Options Trading With StockPair

Since there is no expiration time on this type of trade, your trade continues for as long as it does not hit the point you have mentioned. Stockpair has some great information available right on the website for newcomers to learn binary options trading. They have also provided great information on their website on trading strategies. The trading accounts from Stockpair are available on the basis of your deposits. The account type you have depends on how much money you have in your account. The basic account is called the silver account that needs a minimum deposit of $1000.

As you deposit more in your account you get the status of different account types. With the most basic type of trading account you don’t get access to the trading expert. In addition to that, you don’t have access to the trading indicators as well. What this means is that trading and obtaining profits on your trades with this account is much more challenging than it is to trade on some other platform. You also get the monthly cash back with Stockpair. The cash back you get back depends on the type of your account and minimum balance.

Stockpair helps its traders greatly in knowing all the important information that affects that movement of price of assets. With the indicators made available by Stockpair, you have higher chances of making money on your trades. The detailed information on how many assets you can trade on is available on the website. They are also known for providing clear and clean trading to their traders. They also avoid the unnecessary and difficult jargons used by various online brokers for the sole purpose of impressing traders. While trading with Stockpair you never fear any hidden costs and surprising commissions.

Sign Up With StockPair Regulated Binary Options Broker Today

StockPair Regulation : CySEC , IFSC & MiFID
StockPair Minimum deposit : $250
StockPair Profit per trade : Up to 85%
StockPair Minimum trade : $20
Operated in : Cyprus
StockPair Bonus : Up to 100%
StockPair Regulation area : Most of Europe
StockPair Platform : StockPair

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

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