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All year long, the FCA has been battling fraudulent binary options brokers that have conned their clients. In a statement released by the FCA last week, the institution pointed out how weak binary options regulation was in the UK. Despite being tasked with regulating binary options, the Gambling Commission can only do so if the firm offering binary options have remote gambling equipment in the UK. As you know, binary options trading does not require any physical equipment, as it is an online-based business.

In effect, therefore, the reach of the Gambling Commission is blunted, encouraging the fraudulent activities observed. These losses prompted the FCA to raid 20 offices in London where the binary options brokers were located. Unfortunately, the Gambling Commission does not have the same authority as does the FCA, hence the latter will now take up the role of binary options regulation.

For example, the Gambling Commission cannot offer compensation to clients who lost money binary options regulation comes to the uk! these fraudulent activities. Furthermore, they cannot conduct raids as those seen by the FCA. Up to now, the FCA did not oversee binary options because they were not considered to be financial instruments. This will have to change now after the watchdog has observed the need for tougher regulation.

Therefore, instead of issuing further warnings or a futile attempt to ban binary optionsthe institution will monitor the industry. The new role of the FCA begins on the 3 rd of Januarybut until then, the Gambling Commission is still in charge. Complaints on all binary options bets until the 2 nd of January should still be submitted binary options regulation comes to the uk! the Gambling Commission.

Starting on the 3 rd of January, though, the FCA will be officially in charge of binary options regulation. All binary options firms will need authorization from the FCA before they can operate, and be supervised by the FCA thereafter. Effectively, the binary options regulation by the FCA is bound to have a positive effect on the industry, which people seem reluctant to avoid. Stay up to date with the financial markets everywhere you go.

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As part of its responsibility, the FCA is also tasked with monitoring brokers that offer financial trading. The UK brokerages regulated by the FCA are required to ensure a safe trading environment for their clients. The FCA was established in April In fact, the FCA is one of the few financial institutions to earn respect and is known for its stringent rules.

The UK regulator has always been in the news. Among the many things the institution is tasked with, the primary focus is investor protection.

Some examples include the institution going after banks in the UK when they resorted to undue fees over some of the services provided in regard to payment protection insurance. The FCA is an independent institution that is structured as company. After receiving the royal assent for the financial services act of , a regulatory framework for the financial services sector was created. The institution is considered a leading authority in providing arbitrage services and focusing on investor protection.

The institution is known to be especially strong against the various payday lenders and short-term loan companies. In the financial and investment sector, the FCA imposes strict regulations for companies to obtain legal licenses.

The FCA plays a central role in regulating the financial services industry. The institution promotes investor interests and ensures market integrity and fairness. The watchdog also promotes healthy competition, bearing in mind the best interests of the investor.

Furthermore, the regulator educates the general masses about various financial products, including binary options, and the risks that come with it. It also issues general warnings about potential fraud businesses.

Within Europe, the FCA is considered one of the most stable and strict financial watchdogs for the industry. The binary product in the UK can be viewed as both a financial instrument and gambling. There are some binary firms operating with gambling licenses provided by the UK GC. On the other hand, we see FCA regulated forex brokers that offer binary options as a side product. The way both these licenses are obtained are quite different. Although the FCA does not regulate digital options, this has not stopped it from publishing warnings about various brokers.

The watchdog issues such warnings in the general interests of the public at regular intervals and calls out the firms in its reports. In doing so, the regulator has taken a proactive role in ensuring only legitimate businesses are able to offer their services to UK residents. Therefore, firms that offer such products mainly banks are expected to provide full reporting and transparency for their clients.

If any of the binary options contracts are also put under this scheme, it could mean most unregulated binary brokers will have to obtain FCA licenses, especially if they offer the specific contracts to the UK investors.

Such brokers aim to bring the best practices and transparency into the business. This puts the licensed companies at an advantage due to the strict guidelines and regulations enforced by the FCA. At present, binary options are subject to regulation by the UK Gambling Commission. However, current developments on the legislative side are expected to bring about some changes in the near future. The FCA is contemplating treating digital options as a financial product.

Given the increase in popularity of binary options, the FCA is rumoured to make a decision on including some types of binary options contracts under its umbrella. For the trader, it should suffice to know the ongoing changes will only mean the landscape will shift toward a more transparent binary options industry. Very informative article, thanks for clearing out binary options regulations in the UK, hopefully FCA will finally regulate binary brokers and all the scammers will be forced to shut down.

They will probably need to agree new deals. Earlier, brokerages could obtain FCA licenses, which in turn allowed them to transfer their financial services into Europe. However, with the Brexit referendum, this advantage is likely to be taken away. Therefore, brokerages with FCA licenses will still need to apply for EU licenses to offer their services to the region.

This means UK-based investors will have an institution that will continue to look after their interests and promote and maintain the integrity of the markets.

Skip to main content. Regulation of binary options in the UK The binary product in the UK can be viewed as both a financial instrument and gambling. FCA regulation ensures the following: Client funds are held in custodian bank accounts Client funds are not used for business purposes Brokers are subject to audits that include trade confirmation and pricing The broker has enough operating capital. Comments by traders At present, binary options are subject to regulation by the UK Gambling Commission.

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