Need of Regulation
Binary options trades have increased in the last decades as the most favourite online trading ventures. Traders have been making money by simply predicting the directions of assets on various brokers’ platforms. However, incidences of fraudulent brokers stealing hard-earned money from traders have increased in equal measures. To solve this issue, many governments began to legalize and regulate binary options activities to ensure traders trade safely and securely with their money to earn profits.
Many countries have financial regulators that regulate brokers who provide binary options services to traders. Some countries such as the European Union members accept brokers who are registered by with one country’s regulatory agency. For instance, the arrangement that CySEC (the binary options brokers regulator in Cyprus) has with the EU countries. Fraudulent brokers may claim that they have a license from a regulatory agency of a specific country. However, it is your responsibility as the trader to double check that the regulator has actually registered the broker. You also need to ensure that the license of the broker is still valid.
Binary Options trading industry is quite enticing for traders as well as unskilled individuals who do not know much about trading but still tries to make money since the trades are fast and easy to understand. They are simply based on either a yes or a no. This simplicity has attracted newcomers to the financial markets. However, whenever the participation is too high, the risk involved are proportional too. The industry’s trades hosted on some platforms have sparked a huge negative response from the side of investors because of cases of deceit. The trading is basically done on internet platforms. Because most of these platforms operate outside of regulations, investors are at greater risk of fraud. These non-regulated ways of trading have motives to provide the investor with an overall average negative gain without any probability of net profit, which is outside the rules of regulatory bodies. The complaints fall into three categories, which are, denial to refund or credit customer accounts or reimburse funds to customers, identity theft and unethical usage of software to generate overall losing trades.
To check the scams and stealing, the requisite is to ensure that the investors’ money is going to a trusted account of a third-party which is safe to keep with until the result comes. This is a mandatory part of investment under governmental regulations by government financial regulators. There has always been the need to ensure fair trading practices in binary options so that the money of the clients is not at risk of getting in wrong hands. The already increasing count of the scams is an alarm for the governmental as well other regulatory bodies to check the reforms to regulate the binary trading and strengthen the laws against frauds.
Free market is usually much better option than tight regulated market.