Binary Option Regulations: Rules That Give Traders a sense of security
Binary Option Regulation – Surely you meet a lot of forex traders who have high rules standards in the market. This is not true in the binary option world. On the one hand forex traders have the freedom to choose to trade with brokers with offshore regulations or can take into account the rules of developed countries.Binary options traders do not have any regulations on existing brokers.
The above is now no longer valid after the issuance of binary option rules from the Cyprus Securities Exchange Commission (CySEC). When the rules were issued in 2012, many broker binary options were interested in obtaining a license from the agency.
The development of rules in the binary option slowly erases the worries of traders from irresponsible brokers.
It’s not just traders who benefit from this regulation. Because with these rules make brokers vying to have a license as one way to attract the interest of prospective traders.
Are Binary Option Regulatory Rules Mandatory?
The binary option rule is actually not mandatory and you must admit this fact as a market player. Regulations that are not required by brokers are also what makes regulated broker binary options still rare.
The basis is that every binary option broker has no obligation to regulate the services they have. Many binary options brokers do not have regulations and they are not considered illegal. Not only that, there is no legal basis that says that binary option trading is illegal.
The more people who are interested in trading in binary options make more and more brokers to accommodate the existing requests. The worrying thing is that the increasing number of brokers is not accompanied by the increase in the quality they have.
Even with the emergence of more and more new brokers, traders will increasingly accept the risk of cheating and other fraudulent actions.
5 Benefits of Binary Option Regulations from Brokers for Traders
1. Protect Funds
Under the regulations of the Investor Compencation Scheme, the deposits held by traders will remain protected even if the trader experiences financial problems.This also applies to those of you who trade with brokers under CySEC, where a deposit of EUR 20,000 can be secured.
2. There is a Segretion System
Segretion system is a concept that is familiar to forex traders, because almost all regulatory bodies require this one. In simple terms with a segretation system, the deposit you have will be separated from the management of the broker’s funds.So that in this case it will secure the account that is owned by the irresponsible usage of the brokers.
3. Identify Data
A well regulated broker must have policies related to client identification. The requirements that you need to fulfill include proof of identity such as a KTP, until proof of electricity bills.
Why does the above need to be done?
The above is done to ensure that the trader who will register is not a criminal, not involved in acts of terror, not drug traffickers, or parties who intend to commit fraud, and so forth.
4. Broker Stability Function
One of the conditions that must be met by brokers when they will register with the regulator is the availability of funds. This fund guarantee is an evidence that shows that the broker has the financial ability to survive when there is a loss and shows his capability to pay the profits of traders. In the binary option regulation material, you really need to learn more to know which broker is trusted and which is not.
5. Open Broker Operational System
Another benefit of the existence of this regulatory body is the obligation of brokers to be transparent in showing the operational systems they have. This is useful to monitor when there are fraudulent acts committed by the broker.
An example of the implementation of this function is when CySEC is urged by the European Securities Market Authority (ESMA) to provide warrants for broker binary options under its supervision.
This is related to a mandatory rule, where brokers need to display the price feed directly and reveal how the execution of close options is processed. This is done as a step to respond to the many suspicions related to price manipulation by broker binary options.
2 Benefits of a Broker With Regulations
The 5 things that we have stated above are the benefits that will be gained from traders when trading on binary options. Well, this time we will discuss what benefits brokers have regulated from the existing regulatory bodies. There are at least 2 benefits that will be felt by the broker binary option.
1. Increased Attractiveness of Brokers
The first thing that the broker will feel is the increased competitiveness they have.Prior to the regulation issued by the regulatory body, one of the main weapons used by brokers to attract the attention of prospective traders was the rate payout. Where brokers that have the highest payout potential are considered to have good opportunities to attract the interest of many traders.
After the emergence of regulations from CySEC, the trend of attracting prospective traders is increasingly shifting. Traders are beginning to realize how important the regulation is when it will have a broker and not just prioritize the payout rate .
Also Read : These 5 Best Binary Option Strategies Can Do
This awareness also then extended to brokers and this was evidenced by the large number of broker binary options who began registering to get a license. The binary option broker that is currently licensed by CySEC includes Abyoption, 24Option, Banc De Binary, OptionBit, OptionFair, EZTrader, and others.
2. credibility of brokers
The second reason is closely related to the credibility of brokers. A binary option broker who has a license is certainly more respected than a broker who has not received any license.
Existing regulations also show the security and stability of traders. This is what creates the credibility of the broker with a license.
Indeed at this time binary options are still new compared to the forex market, but this industry has been officially regulated by CySEC. Slowly and gradually, the binary option market is expected to be able to overcome the problems related to regulations that have been a myth. Even UK FCA has conducted an assessment of binary options rules and this is reported by many mass media.
Those are some of the benefits of the rules issued for binary options. From the explanation above we can know that the existing regulations can benefit not only from the trader but also the broker who has a license.
Hopefully the above Binary Option regulation information can be useful for you all.