The CFTC (Commodity Futures Trading Commission), which is one of the major US financial regulators for derivatives, just started the publication of a binary options blacklist for US retail traders. In a move similar to the French financial regulator AMF, the CFTC will regularly issue a list of brokers that should be avoided by retail traders in the United States. These brokers are accused of not complying with the existing regulatory framework of binary options in the USA. As you may know, binary options are traded in a completely different way there. Binary options only trade electronically on dedicated divertive exchanges that were built and regulated solely for the trading of binary options and related derivative financial products. There only exist two regulated derivative exchange in the United States: the Nadex and the Cantor Derivative Exchange. The Nadex accounts for the majority of the market shares in the United States and the liquidity is provided by traders and official market makers that are also regulated by the CFTC.
The CFTC warns US investors against these brokers
While binary options are supposed to trade only through these CFTC regulated exchanges, more and more fraudulent brokers are trying to lure US retail traders on their OTC (Over the Counter) platforms. Most of these brokers are just pure binary options scams that end up stealing client’s deposits. The CFTC decided to build a broker blacklist in order to help US retail traders avoid such problems. It represents the first attempt by a major US financial regulator to tackle the fraudulent binary option broker problem since OTC binary options were banned from the country in 2011. Since then, it is one part of the regulators’ mandates to point out potential transgressions of law and act in the best interests of potential investors.
Of course this new CFTC warning list specifically called RED list, for Registration Deficient, is a lot smaller than the binary option broker blacklist form the AMF that included almost 250 brands in the last update of September 2015. It will take time for US Regulators to catch up with European bodies on this specific subject but we are confident it will definitely help build confidence amid US traders. The CFTC Red list includes foreign entities that illegally solicit US residents to trade foreign currency and binary options. As of today, there are only 19 brokers in the list. We can highlight the fact that Titantrade is included in the CFTC RED list. Back in May 2015 we already warned you against this broker stating that it was not reliable. It turns out we were right at the time.
In Europe, OTC broker are legal but they need to be regulated
As you can see, none of our recommended brokers is included in the CFTC blacklist. This is because binary options brokers that are regulated in Europe are prevented from operating in the US by European regulators. Our recommended brokers are allowed to propose their own platform in Europe because binary options are not traded electronically here. We may also highlight the fact that the Nadex, which is the biggest regulated binary options exchange in the United States, is a subsidiary of IG Group that also offers binary options trading services in Europe through its regulated entity IG Binary. Don’t hesitate to have a look at our detailed review of IG Binary for more information about the broker and use the below secured link to access the broker website and benefit from our full support.