In the recent era, binary options are a rapidly growing method for making money in the financial market. However, it may sound easy but involves tons of risk as various countries have banned the use of binary options trading. So, is it legal to do binary options in Japan? Yes, but there are specific rules that one must follow before trading in Japan.
Several monitoring agencies in a host country keep a track record of all the financial transactions. In the past, Japan has set up certain safeguards to prevent fraud by brokers in options trading.
This article intends to provide information regarding the rules and regulations of binary options trading in Japan. Now, if you aren’t familiar with binary options trading, below is brief information.
What you will read in this Post
What is Binary Options Trading?
A binary option is a trading method done on several platforms for converting your investment into profits. In binary options trading, the traders have to predict the future graph of marketing.
If your prediction comes true, you will win a certain amount. On the other hand, your prediction goes wrong, you will end up losing all the invested amount at once. However, with proper knowledge and tactics regarding options trading, you can convert your financial decisions to substantial profits in the most efficient way.
Regulation of Binary Options Trading in Japan
In Japan, the FFAJ regulates binary options trading, which stands for Financial Futures Association. To prevent scams, brokers must pass the FFAJ test and queries to become eligible as a licensed body for trading. Afterward, they comply with a set of mandatory regulations.
Here is the list of regulations that each FFAJ licensed binary options broker have to comply with;
- Brokers are prohibited from issuing cashback and bonuses as a method for encouraging the traders.
- None of the options brokers can offer any contract to the traders less than 2 hours of expiration.
- It is mandatory for all the brokers in Japan involved in binary options trading to organize a quality testing examination for their clients. This test is to test their knowledge regarding financial investment before accepting their proposal.
- All binary options brokers under Japan have to show trade costs based on payback amounts concerning payback. Japan does not permit leaving the fixing trade amount without updating and illustrating the changes in price by payback amount.
- Japan expects its options brokers to maintain transparency with the traders by explaining all the methods to reach pricing inside the OTC model.
- FFAJ keeps promoting people to downcast the binary brokers outside the country as they may be involved in a scam. Also, brokers outside the country are not responsible for paying any tax and following any regulation mentioned by FFAJ.
FFAJ passed all the above rules in 2013 in Japan, which is under operation to date (2021).
The Financial Futures Association keeps up a working bond with Cypriot & Australian regulators to gain information regarding options brokers trying to expand their market and products in the Japanese trade market situated in the two countries.
According to June 2014 monthly stat report by FFAJ, it was confirmed that they had a $3336.6 million trading volume. This report is highly mandatory for the brokers in Japan as it keeps a record of their robust regulation.
Reason Why Many Brokers Operate Binary Options Trading Outside Japan
The three most essential reasons that the majority of brokers operate binary options trading outside of the Japanese country are simple to understand;
- Unpredictable Act & Rule Implementation
- Unnecessary Strict Rules
- Massive Tax
Unnecessary Strict Rules: You can’t deny that finance management agencies in countries like Japan, the USA, Europe, or other developed countries are stringent. You are already aware of the rule in Japan, as mentioned above.
In most cases, the brokers are pressured to disclose all their transaction details. Also, the amount of tax is insanely high, which isn’t fruitful in favor of the brokers.
Long story short, the brokers must be subject to oversight.
Massive Tax: For small enterprises that do not have significant capital in the Japanese currency, following these strict rules is inadequate even when the brokers are legit.
Also, this results in cumbersome binary options trading as the rules act as an obstacle. Since the taxes are high, even traders are not capable of enjoying more profit.
These are why most brokers working for binary options prefer to operate their services from small countries like Cyrus. In small countries, the finance managing bodies are relaxed with their rules and regulations.
Brokers can effectively work on customers’ profit instead of breaking their back for meeting firm rules.
Unpredictable Act & Rules: Apart from the above, small countries are free from any uncertain rules of government that can be hectic to manage quickly. A similar situation Orchid in the year 2006 when the US government suddenly passed the Unlawful Internet Gambling Enforcement Act (UIGEA).
Under this law, the government prohibited gambling firms from accepting unknown payments involving any middle person in betting involved with Internet use. If any platform breaks this rule, it will be punishable under this act.
Indirectly, this act targeted excluding fantasy sports with specific requirements, legal intrastate, and skill games.
So, it’s common for well-developed countries to pass uncertain rules, but it can massively affect the years-long business infrastructure of the binary option trading brokers.
Japanese Friendly Broker for Binary Options Trading
There are sufficient brokers responsible for the provision of trade in Japan. However, most brokers are situated in small countries, while only a few are located in Japan.
However, there are a few fundamentals to pin in mind while choosing a broker. Here are the questions that you ask and assure to get the best answers before choosing your broker;
- Are they reliable?
- Are their payouts on time?
- Is the broker reputed in the market?
- Do they offer higher return benefits?
- Do they have a positive track record?
- Do they have any special features like Option Builder?
Well, you don’t need to take the burnouts of comparing and surfing the best binary options broker out there. Below is the list of top binary options trading brokers with their core facilities.
#1 IQ Option
IQ Option is an age-old and trustworthy licensed platform from CySEC for binary options. If you are someone searching for a stable CFD, then this one will be a compatible match. This platform has received many awards in the past, making it rank on top of the list.
You can start trading with a cheap amount of $10 and enjoy a maximum payout of 95%. It also offers a Demo account to get your hands on their interface. Within 1-2 business days, you will get your speedy payouts.
However, this platform is not available in 13 countries: the US, Germany, Spain, Italy, Japan, Romania, Russian Federation, Netherlands, Turkey, Australia, Israel, and Belgium.
The platform is available all over the world other than the mentioned countries. They have gotten nearly 4.5 stars reviews from the users, which is pretty high.
- Owns CySec license.
- Won several awards.
- Offers video training.
- Offers a demo account.
- Compatible with all devices.
- Has a wide range of banking options.
- It consists of quality Technical Indicators.
- Available in both application and web forms.
Quotex belongs to Awesomo Limited, which resides on the International Financial Market Relations Regulation Center (IFMRRC).
This site offers the most simple user interface and multiple banking options all over the world. You can deposit money in the euro Dollar Pound and even in cryptocurrency in case of any issue regarding other currencies. If you are of 18+ age, then you can take advantage of trading at this website.
Starting with Quotex is extremely simple. You have to go through a 3 step process that involves signing up, practicing your skills with a free demo account and training materials, and lastly, deposit money and start trading at a cheap rate of $5.
- Simple interface.
- Start trading with $5.
- Get maximum returns up to 98%.
- Offers a free demo account with a $10 000 trade fund.
- The web-based platform is compatible with all devices.
#3 Pocket Option
Gembell Limited, which owns the International Financial Market Relations Regulation Center (IFMRRC) membership, runs the pocket option.
You can start your trade journey with a minimum trade amount of $1 but a minimum deposit amount of $50. Apart from this, you get a 50% bonus on starting bonus. The payout is exceptionally high, with a rate of 128 % (maximum).
Also, you get to enjoy nearly 100 assets along with good banking options. The best part is, it’s open to worldwide users, including US and UK traders.
Also, it has more than 130 assets based on five basic categories;
- Offers a demo account with $10 000 in the virtual funds.
- More than 130 assets are available.
- Get the highest maximum payout of 128%.
- You have a bonus of 50% on your first deposit amount.
- Available on iOS, Android, Web, and Windows.
- Offers High/Low and Turbo trade types.
- Allows getting benefit from Social Trading.
It is now clear that binary options trading is legal in Japan along with certain limitations, but as mentioned above, it involves some financial risk too. So, before putting your leg in this options market, you must be well aware of the rules, strategy, and threats.
Also, as mentioned earlier, the three brokers will be the best for you to trade on options. You may choose any among them and begin your trading journey.