Binary options regulation in the UK to change from Jan 2018 but protection to remain limited - FinanceFeeds

Binary options regulation in the UK to change from Jan 2018 but protection to remain limited

Maria Nikolova

Although individual complaints about binary options can be referred to the Financial Ombudsman Service and consumers will have access to the Financial Services Compensation Scheme, there will be no compensation for losses suffered from binary options trading.

The UK Financial Conduct Authority (FCA) confirmed today that it will be taking over the oversight of the binary options sector effective January 3, 2018. This sector is currently regulated by the Gambling Commission.

From January 3, 2018, firms offering binary options will be authorised and supervised by the Financial Conduct Authority. In addition:

  • individual complaints can be referred to the Financial Ombudsman Service;
  • consumers will have access to the Financial Services Compensation Scheme.

However, those protections will not compensate investors for any losses from trading. The FCA reiterates its warning about binary options scams and the high risks associated with trading binary options.

Binary options are also regulated as investment products in many other European Union (EU) countries. Therefore, under EU financial services law, firms which are legally established and authorised in the European Economic Area (EEA) are entitled to do business in any other EEA country once certain procedural safeguards are met.

Although the FCA does not currently regulate binary options, firms offering binary options trading and operating as financial services firms in other EEA countries, are currently able to do business in the UK and will continue to be after January 3, 2018. If they are, they will appear on the FCA Register of financial services firms. In most cases the firm will still be regulated by its home-state regulator.

The UK authorities have recently sought to clamp down on binary options fraud. On October 17, 2017, the City of London Police conducted a day of action, which involved visiting 20 offices with the City of London Corporation’s Trading Standards. At the end of October, the UK High Court wound up binary options scam firms behind Magnum Options, following an investigation by the Insolvency Service. And early this month, the UK Insolvency Service announced that two binary options firms – Right Corp Limited and Curve Point Limited, had been placed in provisional liquidation. The action followed an investigation by Company Investigations of the Insolvency Service.

Today’s FCA warning about the binary options was accompanied by one about cryptocurrencies, indicating that, exactly as FinanceFeeds predicted, the FCA lumps cryptocurrency investment into same category as binary options fraud.

Read this next

Industry News

Cboe boosts its incentives

A focus on market quality meant that the Cboe BZX exchange was able to capture 36% of all new ETP launches in the US in 2020

Industry News

European ETFs enjoy a trading boom

For Europe as a whole ETF turnover rose by an average of 46% in 2020 to stand at just under €683 billion, or $828 billion

Industry News

Virtu launches big data tools for the buyside

Leveraging existing data science capabilities is a clever retention tool, particularly if that data analysis can show your customers that you are doing a good job

Inside View

Beep beep. Why are FX brokers still using legacy technology? We all need to move on

FX, CFD and listed derivatives brokers need to take heed of how to engage brokers properly. We look inside the developments that are vital to the growth and future sustainability of brokers, and why legacy opinion and sitting on the fence will not work out. Here is the solution.

Industry News

OANDA adds new cross-border payment solution for companies in North America

The partnership combines OANDA’s deep-seated expertise in foreign exchange with Currencycloud’s best-of-breed payment technology and Shift Connect’s world-class customer support to offer a simple-to-use, reliable international money transfer solution for businesses, large or small.

Inside View

Inside view on endless crippling regulation in FX. Surely MiFID was enough?

It still looks as though the whole regulatory obsession with spot FX may be driven by the exchange lobby, hence if you can’t beat them join them – the only thing is of course that if most FX brokers brought their skill and tenacity to the multi asset market, they certainly would beat the exchanges hands down.

Industry News

FXOpen announces the launch of the ForexCup Trading Championship 2021

Global FX and CFD broker FXOpen has today announced they are offering traders the opportunity to compete with the best, to win 50,000 USD, with the launch of the ForexCup Trading Championship 2021.

Industry News

Citadel Securities dominates European FX, and is one of the most profitable businesses in the world

Non bank market makers are absolutely dominating the growth of FX order flow execution. Citadel Securities is now the largest internalizer in Europe by market share, a battle it is winning against Tier 1 banks alongside global leader XTX Markets. It is good to see the OTC sector holding its own.

Industry News

Playtech confirms it has been approached over the sale of Finalto

Finalto was described by the company as Playtech’s outstanding performer in H1 2020