Flashy sites with the latest numbers, fantastic layout, and excellent customer support, and you may actually forget to find out whether the binary options site that you are on has been regulated. The only binary options brokers that are worth trading with are those that have been regulated. There are many sites that have not been regulated yet, and although it is still possible to execute binary options trading transactions on these sites, it is not the wisest decision you can make. Being regulated means that they are being monitored to ensure that they maintain the highest standards and offer excellent service to their clientele. What does it mean for a binary options side to be regulated? Here is a breakdown for you.
Oversight from Government Agencies
This will depend of the country in which the binary options broker is operating in, as each country has its own regulatory authority. In the EU, all the countries that are running binary options trading sites register with one agency which is based in Cyprus. This agency is known as CySEC, which stands for Cyprus Securities and Exchange Commission. For other countries, it is necessary to establish who grants the licenses, and to double check that the site is officially licensed and regulated. To date, the only other countries that are able to regulate online trading frameworks include the USA, Cyprus, The UK, Japan, Malta and South Africa. It is the companies in these countries which regulate binary platforms that are responsible for overseeing what is happening within the financial trading market. If you see that a binary options broker is regulated from any other country, then you should stay away from that broker as it is likely to be fraudulent.
The only way that binary option companies are awarded licenses is if they are 100% legitimate, and have been evaluated to ensure that the services which they offer are fair and safe. These companies are also taxed by the state.
Countries Without Regulation
There are some countries where binary options are not regulated, and others binary options trading is frowned upon and discouraged, although it may not be completely illegal. One of the countries where it is challenging to do binary options trading is the United States, as a large number of binary options sites are not allowed to operate there. Therefore, when people from the United States want to get into Binary Options, they are quite restricted. When searching for a broker, it is essential to ensure that the site is regulated and legally allowed to trade with you.
Protection with Regulation
Regulation protects traders from brokers who may execute a fraudulent transaction, or have an environment where the customer can be abused. This is because to remain regulated, these sites are required to meet some significantly high standards, and failing to do so could lead to the loss of their licenses, something which directly impacts credibility. It does not matter which country that you are in, or which country the binary options trading site is regulated in. As long as it has been regulated, then you are protected by law.
One reason that regulation is important is that it ensures that binary options trading is acknowledged from an activity that is mainstream. This gives credence to its legitimacy, and helps uphold the fact that this type of business is viable for investment, and it legal. Around the world, the only countries which are currently able to regulate binary options trading sites are Australia, Canada, Cyprus, Europe (several countries from the European union who are placed in one group), Germany, Spain, South Africa and France. There are special agencies that help enable the right regulation and licensing has taken place.