Over the last months, the binary option market has gone through a thorough mutation phase and has gained recognition from worldwide financial regulators. The CySec, Cyprus main financial regulator, recently expressed its motivation to strengthen the framework for the regulation of the binary option trading business across Europe with the implementation of the “MIFID II” and “MiFIR” directives. Malta, which is the second country after Cyprus (in 2011) to have officially provided binary options with the status of “financial instrument”, just announced a tightening of the criteria regarding the licensing of entities that would like to offer online forex trading to retail clients. Now, the UK government is looking into putting binary options under the regulatory spectrum of the FCA (Financial Conduct Authority).
Malta regulator wants to strengthen broker license requirements
The Malta Financial Services Authority (MFSA) just issued a regulatory notice regarding stricter criteria for applicants to broker license that would make it more difficult for them to propose binary options to retail traders. The new criteria include higher capital requirements (key for client’ funds security), strengthen shareholding structure and improved transparency. This represents a new positive step for the binary option sector and for investor protection in an attempt to avoid scams in the binary options trading business.
The UK could place binary option under the FCA regulation
London may also be close to announce a groundbreaking regulation update regarding the binary option status. According to a letter sent out by the Head of Gambling, Licensing and Lottery in the UK, Alison Pritchard, the United Kingdom government is looking into revising its stance towards the regulation of binary options. This revision would remove the binary options financial betting category from the reach of the Gambling Act of 2005, instead putting it under the supervision of the Financial Conduct Authority (FCA). The UK government is expected to publish its decision on the matter in January 2015. If approved, the UK would become the first western country to regulate binary options as financial products.
French AMF regulator determined to improve investor protection
The AMF, French financial regulator, also recently launched a prevention campaign against forex and binary option brokers that are not authorized or licensed to propose their services in France. The French regulator is constantly updating its AMF Black List of brokers that French retail traders should avoid. You can consult this list here.