Breaking Forex News… The UK financial regulator, the FCA, has announced that effective January 3, 2018, firms offering binary options in the UK will be regulated by the FCA, and will no longer be licensed by the Gambling Commission.
The decision by the FCA ends a lengthy internal debate at the regulator, as well as negotiations with the Gambling Commission regarding Binary Options. The FCA’s decision comes in stark contrast to the regulatory authorities in Israel, home (until now) to most of the Binary Options platform providers and many binary brokers, which decided to ban the binary industry outright in the country, instead of “regulating” it. The Israel binary options ban also takes effect in January 2018.
Binary options are currently regulated by the UK’s Gambling Commission, but only if the firm has gambling equipment in the UK. Consumers do not currently have the protections offered by the UK’s financial services regulatory framework when purchasing binary options.
However, as firms offering binary options will be regulated by the FCA effective next year, individual complaints can be referred to the Financial Ombudsman Service. Binary Options traders at regulated firms in the UK will have access to the Financial Services Compensation Scheme (FSCS). However, the FCA noted that those protections will not compensate retail clients for any losses from trading, just from an insolvency of the broker.
Binary options are also regulated as investment products in many other European Union (EU) countries. Therefore, under EU financial services law, firms which are legally established and authorised in the European Economic Area (EEA) are entitled to do business in any other EEA country once certain procedural safeguards are met, via MiFID passport. This means that although the FCA does not currently regulate binary options, firms offering binary options trading and operating as financial services firms in other EEA countries, are currently able to do business in the UK and will continue to be after January 3, 2018. If they are, they will appear on the FCA Register of financial services firms.