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Binary options regulation 2020 - tasks of the authorities

Binary options regulation 2020: What conditions do brokers have to comply with? What Legislation Says Now Read & Trade Binary Options.

The security of data and capital of the customers plays a big role in trading and thus also in the decision for or against a certain broker. How much the respective provider pays attention to these factors is controlled by regulators, who keep an eye on the activities of brokers and may intervene if it is Irregularities occurs or there is even suspected fraud. Now the brokers are regulated by different authorities and especially beginners find it difficult to determine whether a serious regulation and thus a relative safe broker, or whether the relevant regulatory authority is considered not recommended. It is often difficult to find the information about the responsible regulatory authority anyway on the websites of the providers. In this article, we have worked out the most important facts about binary options regulation and hope to be able to help readers in this way.

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The tasks of the regulatory authorities

Under the supervision of a state regulatory authority, the broker cannot simply do what he wants. Fraud, money laundering and other undesirable acts by comprehensive supervision prevents what is in the interest of all honest traders. It also ensures that only people who are authorized can participate in binary options trading. The age of majority is an important prerequisite for this.

Serious and fully regulated brokers must be able to transparently prove the way of their money at any time. Customer funds are not counted as company assets, but are strictly managed separately. A binary options warning must also be clearly visible on the website and also in advertising, so that customers do not assume incorrect requirements and also via Risks of trading are informed. A regulator should also ensure that the courses are not manipulated. In practice, however, this is relatively difficult, because the brokers usually act as market makers and therefore set the prices themselves. Nevertheless, it is also possible here to detect irregularities and investigate them.

If the broker goes bankrupt, the regulatory authorities also ensure that this is properly processed and the customers get their money still received if possible. In the past, this worked very well for the bankruptcy of reputable regulated brokers.

To obtain a license from a regulatory authority and thus for trading in binary options To be admitted, brokers must meet some criteria. This includes, among other things, sufficiently high equity capital to ensure liquidity and also to be able to pay out high profits safely and quickly. The technical requirements must also be met to ensure smooth trading under safe conditions.

The differences between the individual regulatory authorities

Not all regulators for financial service providers are the same. Experienced traders avoid brokers that are only regulated by certain authorities and prefer brokers with regulations from other authorities, even if both licenses can be used to legally trade.

This is partly due to the different license provisions and partly due to the implementation of the regulation, if a broker should actually experience irregularities. The authorities should serve to protect customers and intervene quickly in the event of possible damage. However, the individual authorities are active differently. While one regulatory authority intervenes quickly even with small irregularities and clarifies the matter in detail, others have a significantly higher tolerance limit.

The regulators of the EU and England are considered to be particularly reliable among experienced brokers, while the regulation by remote island states such as Samoa, where many brokers are also headquartered, are less reliable applies.

A regulation within the European Union also has the advantage for German traders that the brokers do not easily escape their responsibility, should there actually be a legal dispute. It is of course optimal here if the selected broker for binary options BaFin is regulated, but are only the fewest providers, who are generally considered to be very secure.

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How to see which authority regulates a broker

For brokers with a Branch in Germany is the responsibility of the local Federal Financial Supervisory Authority (BaFin). This authority is considered very safe, which is why such brokers are very popular with many experienced traders and are often used. But now, not every broker for binary options BaFin is regulated, because trading is very internationally oriented and only a few of the established providers have their headquarters in Germany.

A broker is fundamentally regulated by the tax authorities of the country in which its headquarters are located. Since many providers of binary options choose Cyprus as their headquarters due to the favorable conditions, the regulatory authority responsible there CySec plays a major role in the world of binary options, If the provider has further branches in other countries, he is usually registered there, receives a corresponding license and is regulated at least in some areas by the authority of this country.

Serious providers have nothing to hide, so that a broker's homepage should show which authority is responsible for regulating it. Such information should at least be found in Imprint.

Separation of funds ensures security

The brokers receive from almost all regulatory authorities the requirement that the customer funds must be managed strictly separately from the capital of the company. The money is therefore kept in good brokers on separate accounts at trustworthy banks. In most cases, these banks are members of a deposit guarantee fund, so that there is further protection for customer funds. The separate management of customer funds is due to the fact that the deposit does not become property of the broker. The money in the trading account belongs to the trader at all times. Therefore, the broker may not use it for other purposes such as advertising or own speculation, but only serves as Use in trading with binary options.

Should the bankruptcy of the company occur, the client funds do not fall to due to the separate management , because, as mentioned above, is not the property of broker. Therefore, with well-regulated brokers, customers do not have to worry about the provider's financial difficulties, because their funds can be safely paid out.

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Even optimal regulation cannot always prevent losses

A common misconception by inexperienced newcomers is that little happens to them when trading binary options can, if you only choose a reputable and reliable broker. Unfortunately, serious regulation cannot protect against all dangers of binary options, so caution is also required with brokers who are classified by experts as absolutely safe.

The special structure of the binary options Options makes this a high-risk business. So even the best regulation of binary options cannot make it a safe investment, because the "all-or-nothing character" of this form of trading prevents this. Customers should therefore be detailed about the Variance and the possible risk of loss in binary options inform before registering with an online broker. In principle, only money should be invested that traders can easily dispense with, because that is exactly what they have to do in the event of a total loss of the entire deposit. This occurs relatively often with binary options. Under no circumstances should a loan be taken up for options trading or money used which is required for other expenses.

are binary options not always legal

Trading in binary options has long been a legal gray area and is still not completely clearly regulated today. Who can trade binary options with which broker depends on the legislation of the respective country. For example, US citizens are excluded from trading with almost all brokers, since very strict trading laws apply in the United States, binary options are not classified as a serious financial product and by private individuals may not be traded online. Binary options trading is also legally prohibited in some other countries .

For German traders, binary options are legal, but profits must be taxed be. Here it is not necessary to settle each individual trade, but it is sufficient to tax withdrawals as profits.

Since the binary options have a clear gambling character, they may not only be offered with a trading license for financial products, but also with a gambling license, so that binary options can also be found at some bookmakers. Although this is viewed rather critically by professional traders and brokers in particular, since the representation of binary options as bets puts the industry in a doubtful light, the conditions among bookmakers are not inevitably worse, so it is definitely worth taking a look at one or the other bookmaker regarding binary options.

That is why so many binary options brokers choose Cyprus as their main office

Cyprus plays a special role in binary options regulation, because a lot of brokers choose this island as headquarters. Why this is so can be explained quickly: Due to the quite liberal tax laws of Cyprus, the brokers there have to pay significantly less taxes than in most other EU countries. At the same time, due to the EU membership of Cyprus, regulation according to MiFID guidelines has been available since 2004, on which many experienced traders attach great importance. On the one hand, the company only incurs low costs, on the other hand, regulation is carried out by a authority considered to be serious, which gives the broker better chances with demanding customers.

However, the regulation of Cyprus sometimes has a worse reputation than it currently deserves. The country has been a popular location for many international banks and financial service providers for quite some time before EU accession. At that time, not only were Cyprus's tax laws considered liberal, but also the regulatory conditions. Thus, a broker has often occurred through brokers located here. The situation only changed with the EU accession and the restructuring of the regulatory authority. Today, regulation by CySec is considered to be as safe as other EU regulators.

Conclusion: Strict binary options regulation is for traders a big advantage

It is not without reason that professional traders first take a look at the country of origin and the regulatory authority of a broker when they are considering opening a trading account with them. Even the best trading conditions are worthless if it is not certain whether the profits will actually be paid out or whether a broker is a fraudster and it is legally difficult to get at it. Therefore, the binary options regulation is one of the first indicators against which the security and seriousness of a provider are measured. Binary options fraud rarely take place even under strict supervision. However, traders should not rely solely on the regulatory authority, but also read testimonials from other customers and research whether there have been problems with this provider in the past

Even with optimal regulation, there is a high risk of loss with binary options, which can go up to a total loss of the entire balance. Therefore, should also only be traded with reputable brokers only with capital that is planned exclusively for trading with binary options and whose loss can be accepted. Money that is planned for other purposes or is required to cover the running costs should under no circumstances be invested in binary options, as there is a risk of serious financial problems if lost. Before registering with an online broker, you should always read the general terms and conditions carefully. Caution should be exercised with clauses that seem untrustworthy. In case of doubt, potential traders can also inquire at the consumer advice center what to make of the selected provider.

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