How Is Binary Options Regulation Changing in the UK?
Will proposed changes in UK regulation mean greater consumer protection and lead to binary options becoming mainstream trading tools?

As a relatively new investment vehicle, binary options have suffered from a poor reputation in the past. Partly owing to the actions of a small minority of brokers, but also due to these options being classed as gambling in some jurisdictions.
The regulatory landscape has changed significantly since the inception of binary options, and it continues to evolve. In the UK, changes in legislation now look extremely likely, and consumers may ultimately be offered a level of protection which they have not previously enjoyed. Binary options could soon be classed alongside other financial instruments – bringing them into the financial mainstream.
Regulation of binary options brokers up until now, has fallen largely to the Cyprus Securities and Exchanges Commission (CySEC). Brokers adhering to the CySEC regulations (specifically the MiFID elements) were able to use this ‘passport’ to trade anywhere in the EU.
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The CySEC regulations do have some teeth, and have certainly improved the security of traders. In terms of consumer protection for those in the UK however, regulation via the Financial Conduct Authority (FCA) would give far superior peace of mind – and it may be on the way.
The UK government had previously left control of binary options brokers in the UK to the Gambling Commission. This classification has not helped the reputation of binary options, and equally, the Gambling Commission is ill-equipped (and lack any real desire) to regulate brokers effectively.
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In the summer of 2015, the UK government embarked on a consultation exercise to judge whether regulation of binary options would be better handled via the FCA. Relevant stakeholders, and the wider public, were asked their views on where regulation should sit.
The consultation process ended in July, and we understand that the findings will be published in early 2016. The commonly held view is that the government would like to align itself with the rest of the EU, in classifying binary options as financial instruments, and not as bets.
Legal Implications
The importance of regulatory responsibility moving from the gambling Commission to the FCA cannot be overestimated. Key requirements of FCA regulation are likely to include;
• Suitability checks (or ‘wealth’ checks) to ensure products are not mis-sold
• Segregated funds between broker accounts and trader funds
• Dispute resolution processes
Many responsible brokers will already adhere to many of the requirements that FCA regulation brings, or will be able to implement them. So the real value in these changes will be in finally ensuring high standards of any broker operating in the UK.
Enhanced customer protection, coupled with a greater respect for binary options, could see a huge increase in their use. 2016 could be a watershed year for binary options in the UK – for all the right reasons.
FCA is perhaps one of the worst regulators on the planet!
Hi Paul, interesting. Why do you think so?
FCA is perhaps one of the worst regulators on the planet!
Hi Paul, interesting. Why do you think so?
I have searched the net for updates to the binary options revolution and can’t find anything. has a decision been made as to whether this will come under the financial or gambling sectors??
Some interesting points, however would you not argue that…
“As a relatively new investment vehicle, binary options have suffered from a poor reputation in the past. Partly owing to the actions of a small minority of broker”
99% of these operations are bucket shops, the reason for this being the bonus terms and conditions and the massive lack of transparency of the ‘brokerages’.
Hi I am Richard and I am from Ireland, So I was with Binary Tilt and I invested 250 euro but I have been given bad news from the hospital so now I have to get an MRI for a swelling in my brain so I have put in for a withdrawal of 140 euro to help with my hospital bills but I can`t get this! Now I don`t have a bonus and I traded with this some losses so can you tell me why they are not answering me because I have sent in my documents and it was… Read more »
Hi Rich, I was recently stung by this company. They are one to avoid. Have had to communicate with my bank to sort it out.
Well done, Amazing !!!