Binary Options Trading in Hong Kong
Hong Kong is said to be one of the top five leading financial centers in the world. With over 70 of the worlds largest banks, a well established and transparent legal system, and the highest concentration of quality fund managers in this part of the world, makes it a financial empire. The high quality of life, along with the favorable tax regime has contributed to a popular online binary options trading industry in Hong Kong. As popular as the trading of binary options in Hong Kong is, the question still remains if it is entirely legal in the country. Find out everything there is to know about binary options trading in Hong Kong below.
As said before, trading binary options in Hong Kong is a very popular and lucrative investment opportunity. This can be attributed to the favorable tax system. Foreign investors trading binaries in Hong Kong are not required to pay tax. This poses the question, if trading binary options in Hong Kong is legal? To answer this, we must look in too the legality of it.
The main regulatory body governing the financial industry in Hong Kong is the SFC (Securities and Futures Commission). It was first established in 1989 after the market crash in 1987. The SFC may be the main regulator of financial markets, but regarding binary options trading, there are no specific laws around it. It is in a sort of grey area. However, there are no laws making it illegal, and the SFC issues warnings about certain binary options providers, giving traders a certain level of security.
As well, since binary trading is not regulated in Hong Kong, there are no licenced brokers within Hong Kong. Investors must seek international brokerages who are licenced to conduct binary options trading through online platforms. In doing this, investors must choose international brokerages who are reputable and regulated with another foreign regulatory power.
Currency Pairs & Spread
There is a very strong asset base for trading currency pairs in Hong Kong. This is because of the availability to trade with any international binary options company. However, we will touch up on the most commonly traded pairs here. The most traded currencies in the world, called ‘Majors’. They are the following 6 pairs; EURUSD, GBPUSD, USDCHF, AUDUSD, USDJPY, and USDCAD. These currency pairs trade 24 hrs a day every business day of the week. Concerning these major currency pairs traded in Hong Kong, their spreads are very small because of their popularity. Currency pairs who are less traded tend to have slightly larger spreads, and are in a category called ‘Crosses’. These currencies include EUR, JPY, GBP, and CHF among others. The smallest category of currency pairs is called ‘Exotics’. These currencies include MXN, TRY, THB, SGD, and Hong Kong’s currency, HKD. Theses ‘exotic’ currencies have the largest spreads.
When it comes to the online trading platforms used in the Hong Kong market, there are plenty to choose from. None of which have residing regulation from Hong Kong, but should be internationally recognized and regulated. There are an overwhelming amount of trading platforms or brokers offering binary options trading, over 400 to be exact. This number has increased dramatically in recent years and continues to grow as binary options trading becomes more popular in leading financial markets such as Hong Kong.
When choosing a platform to deal with, investors must be wary of fraudulent or unregulated platforms. Some popular binary option platforms used in Hong Kong and around the world are; HighLow, Binary, BinaryOptionsRobot, Plus500, and MarketsWorld. These binary option platforms are international platforms with unique and well-developed interfaces, well suited for investors of all sorts. They are reliable trustworthy.
Almost all international brokers offer bonuses to their clients. However, there are terms and conditions that must be met to achieve these rewards. So, don’t be fooled, often times a brokerage will have enticing bonuses to get you hooked, but may have high fees and other disadvantages to their platforms. That being said, I will give a general overview of the types of bonuses offered by many binary option brokerages for Hong Kong traders.
- Welcome Bonus – This is the most common type of bonus, usually receiving an amount of money just for joining a brokerage and making an initial deposit.
- No Deposit Bonus – Another bonus, like the welcome bonus, rewards you with money just for signing up and doesn’t even require a deposit.
- Mobile Bonuses – This is a bonus for downloading a brokerages mobile application and using it.
- Refer a Friend Bonus – Receive money for getting a friend to sign up, they may be required to make an initial deposit
Deposit and Withdrawal Options
When it comes to deposit and withdrawal methods for binary options, there are many avenues one could go. The most popular methods among investors in Hong Kong are as follows.
- Debit & Credit Cards – This option is popular due to its quick and easy withdrawal and deposit process. The versatility with credit cards is very popular among foreign investors, which make up a large portion of the Hong Kong traders in binary options.
- Bank Wire Transfers – Another popular option due to its seamless and simple process.
- E-Wallet Providers – A very popular method among Hong Kong investors. Popular online money transfer options in Hong Kong include Neteller and PayPal.
Legality & Regulations
Since Hong Kong is a leading financial territory, it has its fair share of regulatory agencies. There is the Hong Kong Monetary Authority and the Mandatory Provident Fund Schemes Authority which covers the majority of the financial industry in Hong Kong. However, the regulatory body which covers the securities and futures markets is the SFC (Securities and Futures Commissions). Since the market crash in 1987, the SFC was established and put to action in 1989 with the objective to ensure the stability and integrity of the securities and futures markets. In addition to this, its roles include the protection of investors and to promote Hong Kong as a leading financial empire. Like the financial markets, the SFC also has a power it operates under called the SFO (Securities and Futures Ordinance).
With all the responsibilities the SFC and other regulatory bodies in Hong Kong have, binary options trading in Hong Kong is still unregulated with no laws pertaining to it. There are no laws stating it’s legal, nor if it’s illegal, and is often questioned whether it falls under gambling or financial investments.
- Are binary options legal in Hong Kong?
Yes, it is legal. As long as the broker is an offshore brokerage not claiming to be based in Hong Kong.
- Are binary options regulated in Hong Kong?
No, it is not regulated. However, it is somewhat overseen by the SFC, as they issue warning lists about what binary options companies to be wary of.
- How can I trade binary options in Hong Kong?
First you need to open an account with an offshore brokerage offering binary trading. The brokerage you choose should be regulated and allow international investors to use their platform.
Best Brokers in Hong Kong
In terms of brokers in Hong Kong, there are none. Hong Kong investors looking to trade this way must look to offshore brokerages.
This article has overviewed the binary options trading industry in Hong Kong in hopes to shine some light on the grey areas surrounding this lucrative investment method. As of now, there are no regulations pertaining to binary options trading in Hong Kong, but with the increased popularity of the practice, we are likely to see some regulation in the future. Besides being unregulated, Hong Kong investors still have numerous options when it comes to offshore binary brokers.