CySEC Flexing Its Muscles Towards FX and Binary Brokers

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Binary Options Trading in the UK

The United Kingdom is one of the few countries around the world that embraces financial betting. Due to the exposure that most of the residents in the UK have to the gaming industry, binary options trading is merely seen as an extension of spread betting and so quickly became extremely popular. However the problem most UK binary traders face is the legitimacy of the binary brokers that they are trading with. How does a trader in UK discern a reliable binary broker from that of a scam? To help our readers in making the right choice, we have come up with a list of recommended platform providers in the UK that traders can open an account and start dealing with. These firms are shortlisted based on certain traits and qualities such as:

  • Good Customer Service
  • Reputable and Regulated
  • Wide range of tradable assets and high payouts

Best Brokers in the UK

To avoid being scammed, binary traders should always trade with regulated platform providers. But because of the UK’s stand towards binary options, traders in the UK have a choice of trading with an operator that is regulated by the UK’s Gaming Commission or with one regulated by CySEC. To help our readers in the UK decide on their choice of broker, we have come with a list of recommended companies that have been closely vetted by us.

Review

Review

Review

Regulations

In the UK, trading of binaries is legal and regulated by the UK regulatory authorities not as a financial derivatives but rather it is classified under gaming legislation as “fixed odds betting” and hence regulated by the UK’s gaming commission. However the kind of legal protection accorded to binary traders under the gaming commission is entirely different from those offered by the financial regulators such the UK’s Financial Conduct Authority (FCA). This is due to the fact that gaming contracts are not legally enforceable in UK’s courts. In addition, the UK’s Gaming Commission lacks the resources to regulate binary operators in the UK effectively.

Nevertheless, there are also no legal restrictions that will prevent traders in UK from signing up with brokerage firms from other countries in the European Union such as Cyprus. In Cyprus, binary options trading activities are regulated as a financial derivative by the Cyprus Securities Exchange Commission (CySEC). Because the UK is still part of the European Union (just about), under the MiFID (passed by the European Parliament), Cyprus based brokers can “passport” their licenses and legally operate in other states within the Eurozone. In other words, firms from Cyprus are legally allowed to offer their services to traders based in the UK. The benefit of trading with a CySEC regulated broker is the fact that UK traders can now rest assured that their brokers are held to a higher standard of accountability. In addition, they will also have access to compensation under the Investors Compensation Scheme should their broker becomes unable to fulfill its contractual obligations due to insolvency.

It should be noted that the binary regulatory landscape is constantly evolving. There have been recent calls to the Financial Conduct Authority to take steps to regulate this type of trading under financial laws rather than gaming laws in order to give better protection to UK’s traders. While CySEC regulations do improve the standard of accountability among s brokerage firms, it is felt that the UK’s Financial Conduct Authority is able to offer far more superior regulatory oversight over online providers operating from within the UK.

Reducing Fraud among UK’s Binary Brokers

Obviously for traders in UK, it is more beneficial to them if their provider is regulated by the FCA as opposed to CySEC since the brokers are subjected to closer monitoring. A well regulated market is in turn less likely to face rampant fraudulent activities, as the brokerage firms are normally required to report their operational activities on a regular basis to the authorities. This leaves less room for the brokers to scam their clients. In addition with tighter regulatory oversight, binary options traders in the UK will have more confidence in their broker hence enabling them to divert their attention more towards trading rather than constantly worrying if their broker will run off with their money.

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  • Binomo
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Deposit Methods Available In UK

With London as the financial center of Europe, traders in the UK have access to a wide selection of payment methods which they can use to deposit funds into their trading account. The most convenient method is by Credit/Debit cards since the funds deposited will be posted immediately to their trading accounts. Another alternative method which is popular among traders in the UK is depositing funds through eWallets. It should be noted that Skrill MoneyBookers’ headquarter is located in London hence providing traders in the UK an extra layer of confidence in getting their deposits funneled through eWallets processed quickly. With UK’s banking industry being well established, UK’s traders are also able to deposit funds through bank wire transfer, although this method is costlier than credit card or eWallet transfer.

  • Is it legal to trade binaries in the UK?

Yes. It is legal to trade binaries in the UK.

  • Are binaries regulated in the UK?

Yes. This trading type is regulated in the UK, either through the UK’s Gaming Commission or through CySEC authorized binary brokers.

  • How to trade binaries in the UK?

To start trading in the UK, British residents can either choose to open a trading account that is incorporated in the UK or with a broker that is based in Cyprus.

How to Avoid Forex Trading Scams in 2020

Forex markets trade trillions of dollars a day. Traders around the globe are always looking for the best broker to trade forex, CFDs, binary options, stocks, cryptocurrencies, etc. With new forex brokers popping up constantly, determining the legitimacy of a broker can be a real challenge. As a consumer, it is vital to research a company before depositing money to trade. At ForexBrokers.com, it’s our mission to assist you as much as possible with that research.

Most Trusted Forex Brokers Comparison

Taken from our forex broker comparison tool, here’s a comparison of the must trusted forex brokers.

Broker Early Expire Average Return Min Deposit Min Trade Rating More
90% $ 10 $ 1 ★★★★★
95% $ 10 $ 1 ★★★★★
× 95% $ 250 $ 1 ★★★★★
× 85% $ 10 $ 1 ★★★
Feature IG
Visit Site
Swissquote
Open Account
CMC Markets Saxo Bank
Visit Site
Trust Score 99 99 99 98
Year Founded 1974 1996 1989 1992
Publicly Traded (Listed) Yes Yes Yes No
Bank Yes Yes No Yes
Tier-1 Licenses 6 4 4 6
Tier-2 Licenses 3 1 2 1
Tier-3 Licenses 1 0 0 0
Authorised in the European Union Yes Yes Yes Yes

Questions to ask to avoid a forex trading scam

  • Is the broker regulated?
  • If regulated, how trustworthy is the regulatory body?
  • Is the broker offering profits or rewards for opening an account?
  • Is the broker offering a cash bonus for opening an account?
  • Is the broker offering automatic trades or signals to guarantee profits?
  • Is any credible information about the company included on its website, such as company history, financials, headquarters’ address, or similar?
  • If awards are cited, can I verify their authenticity?
  • If a big corporate sponsorship is promoted (e.g. athlete sponsorship), am I doing my due dilligence to ensure the company can be trusted?

1) Is the broker regulated?

Unregulated brokers do not have to report to a governing body. This means that if they scam you in any way, whether it be “glitches” or “malfunctions” causing sever slippage in their system, or you go to make a withdrawal and they don’t process it (steal your money), you are out of luck. Beyond posting a bad review online, there is little you can do because these brokers have no legal authority to answer to.

How do I check if a broker is regulated? The easiest way to check a broker’s registration is to look for it at the bottom of the website. The picture below is the bottom of 12Trader, a broker we recommend avoiding. You’ll notice that nowhere in this picture is a regulatory body mentioned. The “about us” pages on the site link to an account login prompt. Nowhere on the site is there any mention of regulation or company history. All of these warning signs should make you cautious.

Now let’s look at the bottom of the homepage of City Index, a trusted and regulated broker.

You will notice 1) the company specifically warns of the risks involved in trading CFDs, 2) the company is registered in England and Wales and has posted an address, and 3) the company is authorized and regulated by the Financial Conduct Authority, and has posted a registration number.

Conclusion: A regulated broker is required to include proper risk disclaimers and regulatory information at the bottom of all their website pages. To make it easy for investors, ForexBrokers.com includes a Trust Score for each broker, which assesses overall trustworthiness based on where the broker is regulated and its history as a firm.

2) If regulated, how trustworthy is the regulatory body?

Some scam brokers claim to be regulated and registered by a governing body that does not monitor or regulate forex companies.

For example, let’s look at Evolve Markets.

The disclosures at the bottom of the homepage give the appearance of a regulated broker. There is a warning of the risks of trading CFDs, and there is a legal section. Upon further examination of the legal section, you’ll notice that while the firm is registered as an international broker company in St. Vincent & the Grenadines, it is not regulated.

This statement from St. Vincent & the Grenadines shows there is a warning against false claims of registration or license.

How do I know what regulatory bodies are legitimate?

Forex brokers that are regulated in a major hub are always more trustworthy. Brokers in emerging hubs can also be trustworthy, but caution is warranted. Based on our annual study of regulatory trustworthiness, here is a list of the regulatory bodies we track and how trustworthy each one is:

  • FCA Regulated – Financial Conduct Authority – United Kingdom – (Great)
  • CySEC Regulated – Cyprus Securities & Exchange Commission – Cyprus (OK)
  • ASIC Regulated – Australian Securities & Investment Commission – Australia (Good)
  • SFC Authorized – Securities Futures Commission – Hong Kong (Good)
  • MAS Authorized – Monetary Authority of Singapore – Singapore (Good)
  • FSA Authorized – Financial Services Agency – Japan (Good)
  • IIROC Authorized – Investment Industry Regulatory Organization of Canada – Canada (Good)
  • FINMA Authorized – Swiss Financial Market Supervisory Authority – Switzerland (Good)
  • FMA Authorized – Financial Markets Authority – New Zealand (OK)

Conclusion: Double check the authority of the governing body that regulates the broker you are looking at. You can go to the website of the governing body to search for the registration number and verify its legitimacy. To help investors find a trusted broker where they live, we have created country-specific forex broker guides.

3) Is the broker offering profits or rewards for opening an account?

Scam brokers often make claims such as “make $50 a day from a $250 investment” or “make 80% returns on profit signals” or “96% success rate.” These claims are a scam, regardless of whether they are being made for forex, CFDs, or binary options. Forex brokers should not promise returns at all, small or large. Simply put, if a broker is promising to make you money, it is a scam. Other common scam practices include advertising pictures of expensive cars that are given away to lucky investors.

This Wikipedia page on binary options does a great job of summarizing risks related to binary options:

“Many binary option “brokers” have been exposed as fraudulent operations. In those cases, there is no real brokerage; the customer is betting against the broker, who is acting as a bucket shop. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect payment, the operator will simply stop taking their phone calls. Though binary options sometimes trade on a regulated exchange, they are generally unregulated, trading on the Internet, and prone to fraud.”

Conclusion: If a binary options or forex broker promises you big returns on your money, this is a clear sign of a scam. You will not make $100,000 on a mega-trade; you will not make a 96% profit in 30 seconds; and you will not win a $40,000 car by depositing $2,000. Save your money and STAY AWAY.

4) Is the broker offering a cash bonus for opening an account?

When a broker offers an abnormally high cash bonus, is not regulated, and does not show offer details for the bonus, then you are likely dealing with a scam broker. For example, 1000Extra hints at a bonus of $1,000 with their vague promotional offer. If you click around trying to gather more information you are redirected to sign up for an account.

1000Extra is not regulated, has minimal information about the company, and has scam reports across the web.

Conclusion: In most regulated regions around the world, promotional bonuses for opening a new account are not allowed. The two exceptions are the United States, which is for US citizens only, and Asia.

CySEC tightens control on forex and binary options brokers in line with ESMA’s guidelines

The Cyprus Securities and Exchange Commission (CySEC) has issued a circular to Cyprus investment firms, setting some new rules about trading bonuses, maximum leverage and withdrawal time. In its essence, these measures are in line with ESMA’s guideline, published in October. First of all, in its paper CySEC says that the brokers “must avoid the practice of offering bonuses that are designed to incentivize retail clients to trade in complex speculative products such as CFDs, binary options and rolling spot forex as it is unlikely that a firm offering such bonuses could demonstrate that it is acting honestly, . (full story)

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Broker 2020!
    Perfect For Beginners!
    Free Trading Education!
    Free Demo Account!
    Get Your Sign-up Bonus Now!

  • Binomo
    Binomo

    Good Broker For Experienced Traders!

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