FCA Makes Binary Options Ban for Retail Investors Permanent

After almost nine months of temporary measures in place, the Financial Conduct Authority (FCA) has confirmed the permanent ban on the sale of binary options to retail consumers this Friday.

The announcement today may not come as a huge surprise to market participants and follows from consultation feedback given to the British regulator. Therefore, from the 2nd of April 2019, all firms acting in or from the UK are prohibited from selling, Marketing Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term or distributing binary options to retail consumers.

FCA Includes Securitised Binary Options in Ban

Overall, the FCA’s rules for binary options are basically the same as the European Securities and Markets Authority’s (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) existing temporary restrictions on binary options, which were implemented on the 2nd of July, 2018.

The only difference, according to the British watchdog, is that its restrictions also apply to so-called ‘securitised binary options’ that were excluded from ESMA’s prohibition. The FCA has decided to also ban this product as it believes it poses the same risks for investors.

Because ESMA’s measures were EU-wide, UK firms already had to adhere to these prohibitions. This means, today’s announcement will not mean any immediate change for brokers operating within Britain, but it does remove the lingering uncertainty as to whether trading of binary options will be permitted again for retail clients.

Commenting on the measures, Christopher Woolard, Executive Director of Strategy & Competition at the FCA, said: “Binary options are gambling products dressed up as financial instruments. By confirming our ban today we are ensuring that investors don’t lose money from an inherently flawed product.”

Specifically, the British agency estimates that the permanent ban on binary options could save retail investors of up to £17 million per year in losses. It also believes that it may reduce the risk of fraudulent activities by entities claiming to offer binary options.

Nonetheless, the FCA warns: “UK consumers should continue to be alert for binary options investment scams and should only deal with financial services firms that are authorised by the FCA. As the sale of binary options to retail consumers is now prohibited, any firm offering binary options services to retail consumers is likely to be a scam.”