The National Consumer Affairs Center (NCAC) of Japan has issued a cautionary note to traders regarding services offered by overseas providers of binary options.
The concerns of the consumer organization spark from the recent surge in cases of traders complaining of being solicited by overseas binary option brokers that do not have the necessary regulatory permission to market their services in Japan. Many of the cases involve aggressive marketing, such as promises of huge bonuses and payouts.
The NCAC notes that the number of consultation requests concerning binary options trading has markedly risen this summer. In July 2014, the count surged to 178 requests, which is a substantial indeed especially when compared to the five consultations regarding binary options trading registered in January 2014. The summer has been a particularly active period for soliciting Japanese traders, with 367 consultations conducted in June, July and August. Since the start of 2014, the number of such consultations has reached 398.
The NCAC stresses that although a company may have a registration and license for its operations in a non-Japanese jurisdiction, in case it wants to provide binary options trading in Japan, it needs to be registered with the Japanese Financial Services Agency (JFSA). The watchdog redirects all traders who wish to check out whether a given company is registered with the JFSA to visit the designated page for licensed financial services providers in Japan.
A pertaining factor is Japan’s regulates binary options as financial instruments. Moreover, since the summer of 2013, new rules have been in force that prohibit trading with options with expiry times of less than one hour. The regulators also advise against bonuses and other incentives related to account opening or deposits as these may hamper the traders’ judgement.
In the face of the tougher rules for binary options in Japan, the country has remained an attractive destination for this type of trading. The domestic brokers keep running successful binary options services, while many overseas providers seek legitimate ways to enter this market. After the new regulations for binaries came in force in 2013, companies like SpotOption and Hello Binary have made advancements to tap the Japanese binary options market. In accordance with this, SpotOption, MarketsPules and Tradologic, three of the major providers of binary options platforms, have all taken the new rules into account, and have released Japan-centric products in tune with them, tailoring their services for the Japanese environment.