Binary options trading is quickly becoming more and more popular around the world. It is a relatively easy type of trading to join and offers a level of simplicity that many find refreshing.
However, binary trading options is still relatively new. As such, there are some countries and regions where it is either not allowed or is not regulated. This article will deal with the legalities involved with binary options trading in the UK.
It will also touch upon the policies that govern this form of trading. Here is the information that you should be aware of:
Is Trading Legal in the UK?
Yes, binary options trading has been legal in the United Kingdom for some time now. This means that brokers can offer up their services and platforms legally and traders can accept them. There is one point of contention that remains, however. This is that binary options trading is not necessarily seen as a form of trading in the UK. Instead, it is viewed as something that is a great deal more similar to betting or gambling. As such, when it comes to taxation and other practices, binary options does not fall in the same category as other financial activities. Therefore, individuals who consider it their primary source of income may have to deal with some confusion regarding the tax laws.
What are the Binary Options Regulations in the UK?
The government of the UK does advise traders to deal solely with binary options brokers that are regulated. This means that these brokers have received at least one license from the appropriate financial agency. This ensures that a particular broker is following the financial and ethical rules that have been laid down by that particular government. Furthermore, should a trader find the services provided either unsatisfactory or fraudulent, they can report these findings to the proper authorities.
In the UK, the jurisdiction of these brokers falls under the Financial Conduct Authority (FCA) and the Financial Policy Committee (FPC). The FCA is the agency that is responsible for creating the guidelines and the rules that binary options brokers have to follow. The FPC, on the other hand, is tasked with ensuring that these regulations are followed by the licensed brokers.
Binary Options Brokers and Licensing
For binary options brokers who wish to deal with UK traders, there are actually many options available. This is due to the agreements in place with the rest of the EU. Owing to this, many of the same regulations and policies remain constant across the nations in Europe.
Therefore, a binary options broker that is situated in the UK is allowed to offer its services to those outside of the UK. This is as long as the traders are in a region that is a part of the EU and that they are licensed by the right organization. This works the other way round as well.
For instance, if there is a broker who is operating outside of the UK, they may still be able to work with those in the UK. Of course, this is dependent on whether or not they have received a license from an appropriate EU financial agency.
These are some of the laws and licensing policies that UK binary options brokers and traders have to abide by.