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Investors in the UK most interested in binary options

Feb 27 2017
By
Jonathan Smith

It looks like the largest part of UK investors seek information and advice on binary options. Enquiries on binary options make up 17% of all enquiries on investment products at FCA Consumer Contact Centre, while those on forex account for 13%. The data is from the latest Data Bulletin of the Financial Conduct Authority (published February 2017) and covers the twelve-month period from 1 December 2015 to 30 November 2016.

 

Binary options are also the investment product registering the highest growth in enquiries, compared to previous periods. Consumers have been contacting the FCA Centre mainly to verify whether firms offering binary options are duly licensed. Typically, the FCA refers consumers with such enquiries to the Gambling Commission, as binary options in the UK are classified as a gambling product (rather than a financial one) and currently are not under FCA’s regulatory scope. 

 

 

This, however is about to change, as according to the Markets in Financial Instruments Directive II (in effect from 3 January 2018) the government's economic and finance ministry (HM Treasury) is bringing certain types of binary options within its regulatory scope. This means that these binaries will be regulated by the FCA.  Until then, investors do not receive the protection offered by the UK’s financial services regulatory framework when investing in binary options (the Financial Services Compensation Scheme protecting customers up to £50,000 per person, in case a licensed company goes bankrupt).

 

The UK’s financial watchdog attributes the increasing popularity of binary options to the current low interest rate environment. The regulator expresses concern that traders in the UK are being increasingly targeted by binary options scams that are not licensed by any authority, either in the UK or abroad.

 

Binary options are a very controversial investment product and often attacked by regulators due to its risky nature. In binary options trading, investors try to guess whether the price of a certain instrument would go upwards or downwards within a pre-determined time frame. 

TAGS: FCA  binary options  UK  regulation  scams  binary option brokers 

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