One of the main barriers to the development of the market of binary options is the issue of legislative regulation of the operations. Let’s look at the main differences that arise in the discussion of the legal field of options trading.
Although the first forms of binary options trading appeared in the early 70s, it arose only in 2008 as well know it. Five years after the appearance of this form of trading, there are still differences in the definition of the market structure. Unlike other areas that have evolved over the years, binary options are a relatively new phenomenon. They have not yet been sufficiently studied, and tested in practice.
There are cases of trafficking in countries without legal regulation of this sphere of activity. In contrast to Forex, where there have already been cases of arrests of illegal traders, such cases have not yet happened in the field of binary options. Most likely, the reason is the lack of an appropriate legislative framework.
Gambling or Trading?
Another typical question is this: how to classify binary options? In some countries, they are referred to a form of investment that is taxed and regulated by law:
- in the US binary options are in the area of oversight by the Commerce Commission in futures and commodities, as well as the Securities Commission.
- In the UK, binary options are controlled by the Authority on the financial behavior.
- In Australia, the supervisory function is endowed with Australian Securities and Investments Commission.
- Cyprus Commission for the Securities and Exchange Commission included a number of binary options in the investment markets. This authority is be engaged in the supervision of this trading activity.
At the same time in most European countries, binary options are not considered to be a form of investment. Instead they are seen as one of the types of gambling. Consequently, there is no supervision and control over operations there.
At the same time, brokers wishing to work with the binary options, need to observe the EU Directive “On the markets of financial instruments.”