Binary Options Licenses

The brokers we review and recommend here are all licensed by either the Cyprus Securities and Exchange Commission (CySEC) or the Malta Financial Services Authority (FSA). If a brokerage holds a license from Cyprus or Malta, it also means that they must follow the EU’s Markets in Financial Instruments Directive (MiFID) and are regulated by the Financial Supervisory Authority (FI) in Sweden.

REGULATED TRADING IN FINANCIAL INSTRUMENTS

Binary trading in options is thus regulated and follows a variety of laws and stipulations. This means that the broker holding a license is a reputable broker that we can recommend. You can still lose money on a wrong investment but you can be sure that the broker will pay out winnings when you invest correctly. They also have plenty of educational materials and also often offer a so-called demo account, where you can, without the risk of losing, try out the broker’s platform.

SHODDY BROKERS

There are less serious brokers and even brokers who hold licenses outside Europe which we will not recommend here. The first and most important information you need to have is whether a broker is regulated or not. It does not matter if they promise high returns, bonuses and free demo accounts, if a broker is not licensed, it is not a broker you can trust.

WHY LICENSES?

Securities and Exchange Commissions sigil
Securities and Exchange Commissions sigil

In 2008, amid the economic crisis, the Securities and Exchange Commission decided that binary options would be offered as financial instruments with a low risk profile for private investors. During this time the trading was still done in the stock market and not via the Internet the way we see today. The following year Banc De Binary was founded and began offering trading in binary options online.

Following this, shoddy brokers began to appear on the market. This contributed to binary options getting a reputation for being fake or a scam. That it was frivolous and that investors just got cheated out of money. Unfortunately, there are always scammers, especially online. Scam brokers may be brokers who do not keep the investors’ money in a separate fund, but rather in a single account, making it possible to use the customers’ money to pay its debts. There is no independent party available to review and ensure the safety of an unregulated broker. If you’re unlucky, you’ll lose both your deposits and profits with a scam broker. As a reaction to this, Cyprus was the first country in the EU to create a regulatory framework for trading in binary options in 2012.