Binary Options – Is Regulation Important?

The binary options market has shown crazy growth during the last 5 years and is getting more populated by both traders and brokers. However, before a trader can even start thinking of making a killing in the binary options market, it is essential to find the right broker to trade with. It is pointless to be with a broker which offers high bonuses or payouts but when it comes to the withdrawal of profits stop short of delivering. So how do you tell which broker to trust?

Trading Regulation

A good way of telling if a broker is trustworthy is to see if the broker is regulated by any financial regulatory bodies. Initially when binary options made their debut into the retail financial market in 2008, there was no regulation to govern the trading of this instrument. It was a veritable free for all. With no regulatory oversights, anybody could set up shop and start offering their services as a binary options broker. Of course this resulted in many brokers acting unethically for the very simple reason that they could get away with it.

regulated Binary brokers

CYSEC Regulation

However, as the market for binaries started to mature, some countries saw the need to regulate this industry to safeguard their reputation as a financial centre. The first country to introduce such regulations for the trading of binaries was Cyprus. In order for any broker to operate in Cyprus, it must first to be licensed by the Cypriot Securities Exchange Commission (CySEC).
Brokers who started their business in good faith immediately saw the value of being regulated rushed to submit themselves to be regulated by CySEC. They understood that being regulated helped to separate their operations from the bucket shops.

The bucket shops at the same time, because of the stringent legal requirements were forced to cease operations or shifted their operations to a country with no regulatory oversights.

In other words, trade only with a broker which is regulated. The more heavily regulated a broker the better it is for you as a client with that broker. This way you can have the peace of mind that your interests are being legally protected. Not just your interests but your deposits too.

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