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UK’s FCA to regulate binary options brokers from 2018

Nov 15 2017
By
Jonathan Smith

 UK’s Financial Conduct Authority (FCA), which is in charge of the financial markets and financial services providers in the country, including forex and CFD brokers, announced that from January 3, 2018 it is taking over the regulation of the binary options brokers, as well. Until now, the binary options companies in Great Britain were overseen by the Gambling Commission.

 

The new state of things would mean that the binary options brokers will be authorized and supervised by FCA, individual complaints will have to be referred to the Financial Ombudsman Service and consumers will have access to the Financial Services Compensation Scheme. This, however, does not mean that the compensation scheme will cover clients’ losses from trading. Rather, it will compensate the funds held in clients’ accounts in case the brokerage goes bankrupt.

 

In addition to the announcement, the FCA has warned of the risks associated with binary options, noting that they are very risky and highly addictive. The regulator quotes data, which proves that usually the consumers find it difficult to make sustained profits over a series of bets and end up losing their money, even when dealing with proper brokers.

 

Furthermore, the investors can become victims to a binary options fraud. According to the FCA statistics, since 2012, there have been a reported 2 605 victims who lost £59.4 million on binary options scams.

 

The FCA also notes that the binary options brokers licensed by the regulators of other countries within the EEA (EU + Iceland, Norway and Lichtenstein), can continue to operate legally in the UK and will only be entered in FCA’s register of financial services firms.

 

TAGS: fca  binary options  fraud  uk 
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