Binary Options Brokers Regulation

Forex Regulators

Binary Options Brokers and Licensing Authorities

Registration with a trustable government body adds creditability to any binary options broker.

Regulators enforce brokers to apply certain policies and practices towards minimizing their operational risk, but also to protect corporate and customer funds. Regulators may impose fees to brokers who misbehave and work as a shield in favor of binary options traders. In general, regulation matters.

Each different country has its own governing body which aims to monitor and to control the domestic financial sector. Since the past couple of years, binary options brokers started to get licensed from CySEC (Cyprus). Some other brokers have also registered with FCA (UK), BaFin (Germany), etc. This is good news for binary options traders. Here are the most important regulators in Europe, per individual country:

The United Kingdom -The domestic governing body for the United Kingdom is the Financial Conduct Authority (FCA UK)
Cyprus -The domestic governing body for Cyprus is the Cyprus Securities and Exchange Commission (CySEC UK)
Germany -The domestic governing body for Germany is the Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin)
France -The domestic governing body for France is the Autorité des Marchés Financiers (AMF)
Spain -The domestic governing body for Spain is the Comisión Nacional del Mercado de Valores (CNMV)
Italy -The domestic governing body for Italy is the Commissione Nazionale per le Società e la Borsa (CONSOB)
The Netherlands -The domestic governing body for the Netherlands is the De Autoriteit Financiële Markten (AFM)
Poland -The domestic governing body for Poland is the Komisja Nadzoru Finansowego (KNF)
Ireland -The domestic governing body for Ireland is the Central Bank of Ireland (CBI)
Sweden -The domestic governing body for Sweden is the Finansinspektionen (FI)
Austria -The domestic governing body for Austria is the Finanzmarkt Österreich (FMA)
Belgium -The domestic governing body for Belgium is the Financial Services and Markets Authority (FSMA)
Czech Republic -The domestic governing body for the Czech Republic is the Česká Národní Banka (CNB)
Denmark -The domestic governing body for Denmark is the Finanstilsynet (FSA)
Finland -The domestic governing body for Finland is the Finanssivalvonta (FIN-FSA)
Greece -The domestic governing body for Greece is the Hellenic Capital Market Commission (HCMC)
Hungary -The domestic governing body for Hungary is the Pénzügyi Szervezetek Állami Felügyelete (PSZÁF)
Latvia -The domestic governing body for Latvia is the Finanšu Un Kapitāla Tirgus Komisija (FKTK)
Luxembourg -The domestic governing body for Luxembourg is the Commission de Surveillance du Secteur Financier (CSSF)
Malta -The domestic governing body for Malta is the Malta Financial Services Authority (MFSA)
Norway -The domestic governing body for Norway is the Finanstilsynet
Portugal -The domestic governing body for Portugal is the Comissâo do Mercado de Valores Mobiliários (CMVM)
Romania -The domestic governing body for Romania is the Romanian National Securities Commission (CNVMR)
Slovakia -The domestic governing body for Slovakia is the Národná Banka Slovenska (NBS)
Slovenia -The domestic governing body for Slovenia is the Agencija za trg Vrednostnih Papirjev (ATVP)

Two Popular Regulatory Authorities

FCA UK (Financial Conduct Authority)

□ Foundation: 2013 (previously Financial Services Authority, about 4,500 employees)

□ Capital Requirement: 100,000 to 1 million GBP

□ License Cost: 35,000 to 50,000 GBP

□ Covering: 50,000 GBP per client

□ Reliability: 9/10

► Website

FCA UK The Financial Conduct Authority monitors the British financial industry and regulates financial institutions such as commercial banks, investment firms, brokers, and dealers. FCA has under supervision 56,000 businesses, and it is the prudential regulator for over 18,000 of these firms. The FCA objectives include:

-Protecting financial markets & consumers

-Promoting competition in the domestic financial industry

European Economic Area (EEA) Authorization

The FCA also provides the European Economic Area (EEA) authorization, according to MiFID standards. However, the EEA firms are regulated in their home country, and not by the FCA.

FCA UK Registration Requirements

The registration process requires 1 calendar year
Initial capital requirement between £100,000 and £1 million, depending on the execution model (DD, STP, ECN)
Liquid cash of £100,000, unrelated to clients’ funds
License costs £35,000 to £50,000
Sufficient liquid capital to cover any probable negative impact from the company’s positions (liquidity is regularly monitored)
The broker should not have any debt
Client bank account segregation
Following the anti-money laundering regulations

Client Account Segregation

All FCA-regulated brokers are obligated to segregate their client funds from their own funds via Top-Tier banks.

Covering Client Funds in Case of Insolvency

In the case of insolvency, clients of FCA-regulated brokers can claim up to £50,000. The coverage operates under the FSCS (Financial Services Compensation Scheme).

CySEC (Cyprus Securities and Exchange Commission)

□ Foundation: 2001

□ Capital Requirement: €125,000 to €1.0 million

□ License Cost: €35,000

□ Covering: 20,000 EUR per client (through ICF)

□ Reliability: 7/10

► Website

Established in 2001, the Cyprus Securities and Exchange Commission (CySEC) regulates the domestic financial industry. CySEC was the first regulatory authority to provide licenses for binary options firms.

CySEC responsibilities include:

-Monitor and control the local investment industry (investment firms, consultants, brokers, etc.)

-Provide licenses to financial firms domiciled in Cyprus

-Impose penalties or even withdraw licenses in case of regulatory non-compliance

CySEC Registration Requirements