What is a Binary Options trading license – Definition & examples

A binary option is a complex financial feature that offers a fixed price as payment or nothing at all. The payment depends on the yes or no result of a trade i.e the trade’s ability to rise or fall. Contrary to other options, a trader on binary options cannot buy or sell an asset, instead, the trader predicts the outcome of two possible results and then places a trade.

Regulations in trading

Binary trading Options license

Due to a high risk of online fraudulent activities and unauthorized usage, companies offering binary options are being issued with a Binary Options Trading License. Binary Options License refers to a license being issued to a broker offering Binary Options services and they are highly regulated and maintained through strict rules by different regulatory bodies. 

The key role of these regulatory bodies like the SEC or the CFTC in the USA is to serve and protect the public interest. There is a noticeable increase in the number of online trading platforms and most of these platforms do not necessarily comply with the regulatory requirements of these regulatory bodies. 

It is necessary for traders to know some of these license regulatory agencies available in different countries as well as some licensed trading platforms.

 

These are license issuing and regulatory bodies found in different regions globally. Some of them are:

  1. CySEC (Cyprus Securities and Exchange Commission) is based in Cyprus.
  1. AMF (Autorité des Marchés Financiers) located in France.
  1. MiFID (Market in Financial Instrument Directive) is located in Europe.
  1. FSA (Financial Service Authority) is located in the United Kingdom.
  1. CFTC (Commodity Futures Trading Commission) is located in the United States.
  1. FMRRC (Financial Market Relation) is located in Russia.

Licensed Binary Options platforms

Some licensed and regulated brokers for Binary Options include:

  • Deriv: This platform is regulated by the Financial Service Authority, Malta Financial Services Authority, the Labuan Financial Services Authority, the British Virgin Islands Financial Services Commission, and the Vanuatu Financial Services Commission.
  • Nadex: They are regulated in the USA by the Commodity Futures Trading Commission (CFTC) with its headquarters in Chicago.
  • CX Markets: This broker is regulated by the Commodity Futures Trading Commission (CFTC) in the USA.
  • IQ Option: They are regulated by the Cyprus Securities and Exchange Commission (CySEC) in Cyprus.
  • Binary.com: They are regulated by the Malta Financial Services Authority, Vanuatu Financial Services Commission, and the British Virgin Islands Final Services Commission.
  • BDSwiss: They are regulated by the Cyprus Securities and Exchange Commission (CySEC) in Cyprus.

Benefits of trading with authorized or licensed brokers

Insurance of Funds:

Investors are being protected from losing funds in the event of a broker’s incompetence. Licensed brokers are mandated to have insurance for the funds deposited by investors on their platforms. 

 

Security and protection of funds

The rules placed by regulatory agencies protect investors from being manipulated by brokers or being subject to online fraudulence. Brokers are mandated to abide by country-specific regulations and operate legally.

  • High-quality assets: Due to the strict rules governing their license, brokers offer high-quality binary options products at a fair price.
  • Customer care: An authorized broker offers 24/7 live chat support for their customers.
Funds in trading

Conclusion: Only trade with licensed brokers

Trading with a licensed and regulated Binary Options Trading Company is very vital in today’s competitive markets as these companies are placed under strict laws and are monitored by various national and international agencies. 

These agencies ensure that the trading companies provide their customers with the correct services and also follow the laid down rules and regulations set on issuing these licenses.

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