Post by atumdjeheuty on Jan 26, 2018 7:12:08 GMT 4
18 January 2018
Article by Helen Lavery and James Watson
Mishcon de Reya
Offering binary options had, until recently, been regulated by the Gambling Commission - but only if the business offering binary options had remote gambling equipment located in Great Britain. On 3 January 2018 that all changed and binary options trading became regulated by the Financial Conduct Authority (FCA)
On 12 January 2018, only nine days after assuming responsibility, the FCA published a list of 94 firms that do not have authorisation but are believed to be offering binary options to UK consumers. The FCA explains that the list is based upon information that the FCA received from consumers, partner agencies and from monitoring the binary options market. The FCA has stated that it is examining each of these firms to determine whether any are actually operating from within the UK and will no doubt take action against those which are breaching the General Prohibition.
Firms that continue with binary options trading without authorisation will now be in breach of the "General Prohibition" contained in section 19 of the Financial Services and Markets Act 2000 (FSMA) which makes it a criminal offence to carry on a regulated activity within the UK without FCA authorisation or an exemption.
What is Binary Options Trading?
In its simplest form, binary options customers speculate between two financial outcomes - for example, whether the expected price of a stock, commodity or the value of a cryptocurrency will be higher or lower after a set period of time. A binary trader offers a fixed return to a customer who predicts the outcome correctly and a fixed loss if the prediction is wrong. The key difference then between traditional stockbroker trades and binary options trading is that the risk and reward is clear and fixed from the offset.
Concerns about Binary Options Trading
The FCA says that its concern is that binary trading operates in a similar way to fixed odds bets and thus can lead to addictive behaviour. The lower the probability, the higher the return that is offered to a customer and vice versa. If a customer is to make a profit from their trading they need to beat the odds on a regular basis.
The future
Firms offering binary option trading are clearly in the spotlight and this whole area is being eyed with deep suspicion by regulatory and law enforcement agencies. The City of London Police had been focusing on this area and in October 2017 carried out a joint operation with the FCA in what was termed a "day of action" to gather intelligence on different types of investment fraud. Bringing the regulation of binary trading options within the remit of the FCA sends a clear message that this is an area in which it is now going to be taking the lead and we are likely to see significant enforcement action.
Article by Helen Lavery and James Watson
Mishcon de Reya
Offering binary options had, until recently, been regulated by the Gambling Commission - but only if the business offering binary options had remote gambling equipment located in Great Britain. On 3 January 2018 that all changed and binary options trading became regulated by the Financial Conduct Authority (FCA)
On 12 January 2018, only nine days after assuming responsibility, the FCA published a list of 94 firms that do not have authorisation but are believed to be offering binary options to UK consumers. The FCA explains that the list is based upon information that the FCA received from consumers, partner agencies and from monitoring the binary options market. The FCA has stated that it is examining each of these firms to determine whether any are actually operating from within the UK and will no doubt take action against those which are breaching the General Prohibition.
Firms that continue with binary options trading without authorisation will now be in breach of the "General Prohibition" contained in section 19 of the Financial Services and Markets Act 2000 (FSMA) which makes it a criminal offence to carry on a regulated activity within the UK without FCA authorisation or an exemption.
What is Binary Options Trading?
In its simplest form, binary options customers speculate between two financial outcomes - for example, whether the expected price of a stock, commodity or the value of a cryptocurrency will be higher or lower after a set period of time. A binary trader offers a fixed return to a customer who predicts the outcome correctly and a fixed loss if the prediction is wrong. The key difference then between traditional stockbroker trades and binary options trading is that the risk and reward is clear and fixed from the offset.
Concerns about Binary Options Trading
The FCA says that its concern is that binary trading operates in a similar way to fixed odds bets and thus can lead to addictive behaviour. The lower the probability, the higher the return that is offered to a customer and vice versa. If a customer is to make a profit from their trading they need to beat the odds on a regular basis.
The future
Firms offering binary option trading are clearly in the spotlight and this whole area is being eyed with deep suspicion by regulatory and law enforcement agencies. The City of London Police had been focusing on this area and in October 2017 carried out a joint operation with the FCA in what was termed a "day of action" to gather intelligence on different types of investment fraud. Bringing the regulation of binary trading options within the remit of the FCA sends a clear message that this is an area in which it is now going to be taking the lead and we are likely to see significant enforcement action.