The UKGC (United Kingdom’s Gambling Commission) just issued a warning to binary options brokers operating in the UK reminding them that they still need a gambling license to legally offer their services in the country. The warning is also intended to remind British traders about the risks of fraudulent brokers and the best methods to avoid scam binary options websites.
Binary option trading is comparable to gambling
As you probably already know, the CySEC (Cyprus Securities and Exchange Commission) is the only European financial regulator to include binary options in the list of financial instruments that fall within the scope of its regulatory legislation following approval by the European Commission in 2012. All the other European financial regulators (FCA in the UK, AMF in France, BaFin in Germany…) can only provide brokers with an authorization to operate in their domestic country provided the broker already received a trading license from the Cyprus regulator. It does not mean that a binary option trading is comparable to gambling. Indeed, it is just a new financial instrument that European financial regulators are slowly integrating into their scope of regulation.
The gambling license requirement only apply to UK based brokers
In the UK, binary options brokers are still falling within the scope of regulatory legislation from the Gambling commission. This is why each broker still needs a license from this institution if it wants to operate legally in the UK. Nevertheless, even if binary options betting operators in the UK are currently regulated by the Gambling Commission, this is set to change in the future as regulation of such products transfers to the Financial Conduct Authority (FCA). Binary options brokers that are based overseas do not need a Gambling Commission license to operate in the UK. Reputable brokers will, however, be licensed and regulated in the jurisdiction in which they are based, which end up being Cyprus for most of the best binary options brokers.
The UKGC lists a number of warning signs to help traders recognize a scam
- If something sounds too good to be true, it probably is. There is no such thing as a risk-free transaction involving binary options.
- Beware of cold-calling. If you have not contacted an operator beforehand, it would be wise not to engage with them and you should not give them any personal information.
- Beware of false claims about operator regulation. Binary options brokers based in Great Britain currently need to be licensed by the Gambling Commission and to display this on their websites.
If you really want to avoid any scam, we advise you to only trade with our recommended binary options brokers. You can find all the regulation details of all our recommended brokers in our article: Best Regulated Binary Option Brokers – CySEC – FCA. We will be able the help you if you face any problem with these brokers.