International Binary Options Regulation is Happening
A few major Forex websites recently examined the binary options regulatory environment. Although the demand is high the industry is still largely unregulated. Regulation began in the U.S with the CFTC. But the recent rise of the industry has led for other countries such as Cyprus, Japan, the UK and others to examine and regulate binary options so that they are safer for traders to use. The differences between regulation in American and the EU and Japan has raised a wall between these countries, at least in terms of this new form of trading. They each have their own rules and regulations which determine the way in which a broker can operate and none of them are in agreement. A broker regulated in one country may not meet the standards of another.
Regulated Binary Options All Over the World
U.S. CFTC regulated binary options are much different than the retail over the counter binary options offered in other countries. It requires options be traded on an exchange, among other differences from spot trading. However, the laws and regulations are still unclear and have allowed many of the off-shore based brokers to continue accepting U.S. traders. At this time there are only a few places to get binary options that are sanctioned by the CFTC, the main being NADEX followed by the newer Canto Exchange started by the international brokerage services company Cantor Fitzgerald.
Cyprus paved the way to binary options regulation in the EU. The island nation, already a popular haven of international banking, was a growing hub for binary options platforms and brokers. The country enacted legislation in 2012 that led to regulation of the industry in 2013. Now, any company wishing to operate in Cyprus must become regulated and comply with CySEC. As an added a bonus CySEC regulation gives the brokers access to the rest of the European Union. The EU charter and the MiFIB allow financial services companies registered in one member country to operate in the other member nations, provided they meet the requirements of the other member nations. Britain and Germany are only two of the many EU nations that have extended the shelter of regulation to the industry. Many new brokers will be coming under regulation in 2014.
Japan became the third major hub for binary options regulation during the summer of 2013. The country was not happy with the off-shore, CySEC style of trading. After a long period of review and debate the Japanese FSA (Financial Services Authority) passed and enacted legislation to regulate the industry in their country, ending an embargo on new brokers. The interesting thing is the way in which the FSA require the brokers to operate. It is a blend of spot binary trading like you find among the CySEC style brokers and 0-100 trading like you find in the U.S. For this reason Japan may have become the stepping stone for an international standard of trading.
Brokers and binary options services are taking heat around the world. Several countries have issued warnings to brokers, signals services and others operating in their jurisdiction without proper registration or regulation. Cyprus recently censured NRG Binary and others like the French AMF, Canandian BCSC and U.S. CFTC have been doing the same to other brokers. Most notably perhaps was the high profile ousting of Banc De Binary from the U.S. marketplace. Additionally, respectable brokers are showing up on the warning list every day. This does not mean that they are bad brokers, it just means that regulatory jurisdictions are beginning to clash. CySEC regulated brokers are respected financial institutions in the EU, but in Canada many are not registered and have received warnings.