Top 10 UK Binary Options Brokers – May 2016

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How Binary Options are Regulated

The financial markets are widely regulated across the globe with each country/regulatory body having their own unique policies that must be fulfilled along with the more obvious global requirements.

Regulation is also charged with curbing fraud and money laundering in financial markets and this plays a crucial role to ensuring that traders do not lose their money to fraudsters, while at the same time seeing to it that the market does not become a racket for money launderers.

[us] Binary regulations and rules

In addition, regulation is charged with making sure that all players in the market, and especially the institutions, brokers and dealers adhere to certain rules that guarantee client funds protection. This is done to ensure that in the unfortunate event that a broker/dealer goes bankrupt, client funds are well protected.

This also guarantees that broker dealers and other financial institutions do not use client funds for transacting their own businesses, in which they would be risking losing more than they can afford to.

For financial markets players, being a member of some of these regulatory authorities is seen by investors and traders as one of the main legal platforms that they can use to trade the markets. Unregulated broker/dealers are seen as suspect and thus traders tend to avoid them whenever possible.

How/when Binary Options qualified to be Financial Instruments

Generally, binary options are not as new to the financial markets as most people would think. They have been traded for quite some time now, but as exchange traded binary options. However, the types of binary options I am talking about in this write-up is the digital binary options, which are basically traded on online/web-based platforms.

Most of the contract types are close-ended with the option of making a predetermined return if the option expires in the money, or losing a predetermined amount/everything if the option expires out of the money. So it is more or less, a Yes/No outcome at expiry.

Due to this unique feature, and given the fact that they traded on web platforms, many governments viewed them as some sort of online gambling. In fact, there are some bodies that are yet to recognize binary options as financial instruments, 10 or so years down the line after they emerged in the world of financial markets in the mid-2000s.

However, when you look closely, binary options are actually financial instruments and this claim is also supported by the fact that many governments and financial regulatory bodies especially in Europe now license and regulate binary option brokers and related players.

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With binary options brokers and platforms, two main requirements stand out. The first is compliance with client funds protection, and the other is adherence to fair trading conditions, in which case the platform providers and brokers must not tinker with the trading platforms. There have been cases before regulation of binary option brokers began, where some players were manipulating the prices reflected on the platform to suit their own interests.

However, since Cyprus Securities Exchange Commission (CySEC) in 2012, the Financial Conduct Authority (FCA-UK) along with MiFID (Markets in Financial Instruments Directive) along with other bodies began regulating the binary options markets; there has been a massive improvement in terms of security of client funds and fair play.


The bottom line is that Binary Options are now widely regulated, which is a good thing and this is mainly because they have finally been recognized as legal financial instruments by various regulatory bodies, but there is still a long way to go in some of the markets/countries.