Binary Options Trading in Indonesia
Indonesia is one of the emerging democracies in South East Asia. It is strategically located in the Pacific ream, within touching distance of Australia, New Zealand, Japan, China and South Korea, the major investment hubs of the region. However, Indonesia also houses the largest Muslim population of any country on earth. How does culture and religion mix with modern day investments such as binary options in Indonesia?
Indonesia’s financial markets are regulated by the Indonesia Financial Services Authority, known locally as the Otoritas Jasa Keuangan (OJK). This organization was formed in 2011 in response to the evolving nature of the financial markets and the need for regulatory activity to keep pace with these changes.
Indonesia quickly become a popular destination for retail trading with the onset of democracy, as brokers from around the world jostled for the country’s largely untapped market and sizeable young population that were eager to try out these new financial products. Prior to the formation of the OJK, Indonesia’s markets were weakly regulated and this opened up the investment public to a lot of regulated and unregulated financial products, marketed mainly by offshore brokers.
Traditional forms of investing in Indonesia are subjected to tax at rates higher than what obtains in many countries. This makes the trading financial products with offshore brokers more alluring. High powered marketing from offshore brokers is paying off, and many young people are trading binary options with offshore brokers. A review of the websites of some of the top binary options brokers will reveal the presence of Indonesian as one of the languages in which services are offered.
Recommended Binary Brokers in Indonesia
The OJK is responsible for the regulation of the following financial bank and non-bank products:
- Banking: Regulation of commercial banks, rural banks, microfinance banks and Sharia banks.
- The Indonesian conventional capital market and the Sharia capital market.
- Non-bank financial products such as pension funds, insurance and regulated investment schemes.
The OJK also provides a comprehensive consumer education and protection structure. There is also a whistleblowing department within the OJK, as well as a task force which cracks down on what is classified as illegal investment schemes.
One thing stands out very clearly: there is a very strong direction from the OJK towards ensuring that financial investments and markets within Indonesia conform to Sharia standards. This brings us to the question: are binary options allowed in Indonesia within the context of the Sharia standards of investing which the OJK follows?
Forex and binary options may not be considered illegal in Indonesia by law, but the OJK has made moves to actively block access to these instruments using a variety of means, which include blocking access to numerous offshore broker websites from within the country. OJK’s bias towards Sharia-compliant investment vehicles is not deterring the young populace from trading binary options with offshore brokers.
Currency Pairs & Spread
The Indonesian Rupee is not traded on international platforms. Therefore, Indonesian traders have to make do with trading currency pairs and other assets that may be quite unfamiliar. However, the Australian Dollar is traded on binary options platforms. Other regional stock indices are also traded. These assets represent the closest assets that Indonesians may have some familiarity with.
There is no particular geographical bias when it comes to where Indonesian binary options traders choose to trade binary options. Therefore, a mix of proprietary and turnkey trading platforms, which represent the diversity of binary platforms used, will be encountered by Indonesian traders.
The availability of bonuses is dependent on what offshore brokers are used. Trading with CySEC-regulated brokers does not guarantee the issuance of bonuses as these are banned by CySEC. Brokers in jurisdictions such as Belize or Mauritius are not prevented by the country regulations from issuing bonuses, so these may be made available to Indonesian traders who do business in those areas.
Deposit and Withdrawal Options
What deposits and withdrawal options are available to binary options traders in Indonesia?
- Bank wires: Several Indonesian banks offer bank wires and integrated card services to complement the funds transfer system. Bank Mandiri (Persero) Tbk PT and Bank Negara Indonesia (Persero) Tbk PT provide wire transfer and card services through VISA and Mastercard. Bank Permata Tbk PT has a similar collaboration with VISA.
- Digital wallets: Bank Indonesia, the country’s central bank, regulates the use of digital wallets in the country. Usage of digital wallets is relatively low and is restricted to local methods such as T-Cash, Indomaret Card and Mandiri e-money.
- Card Options: China UnionPay seems to have made tremendous in-roads in the card payments market in Indonesia. Other local and international card brands are also available.
Legality & Regulations
What are the legal considerations attached to the conduct of binary options brokerage and trading in the Indonesia? In 2011, Indonesian lawmakers passed an amended version of the 1997 Futures trading law. Named the 1997 Law on Commodities Futures Trade, the amended law covers derivatives trading in Indonesia, including Sharia compliant derivate assets. However, the law was silent on binary options.
Trading binary options in Indonesia is therefore not banned by law, but the OJK wants to limit access to these products by blocking the websites of binary options brokers. A government website known as TRUST+ keeps a database of brokers that the OJK deems as having taints on their operations as a result of complaints made against them. Is there a chance of an outright ban on binary options in the works? This is not known at the moment.
Here are the frequently asked questions that most users may have about the binary options industry in Indonesia.
- Are binary options legal in Indonesia?
Answer: Binary options trading in Indonesia is not illegal. This is because there is no law banning the trading of binary options in the country. There is also no record of anyone being arrested for trading binary options.
- Is it safe to trade binary options in Indonesia?
Answer: Indonesian binary option trading is increasing in popularity, but so has the cases of scams by unregulated brokers who have exploited the relative naivety of the local population to perpetrate their fraudulent schemes. Binary option trading is not very safe in Indonesia.
- As an Indonesian citizen, am I allowed to trade binary options with offshore brokers?
Answer: There are no laws restricting the trading of binary options by Indonesians with offshore brokers, as is the case in Turkey, Belgium, Canada, Israel and the US.
Best Binary Options Brokers in Indonesia
The top binary options brokers in Indonesia are those who are regulated, have a robust Indonesian language offering as well as offer payment systems which can easily be used by Indonesian traders.
Binary options trading in Indonesian is at a crossroads. The OJK has not released any statements or policy direction either legalizing or banning binary options. Clearly, the target has been to keep the products away from the populace by blocking access to the broker websites. But this is not clearly working as many Indonesian traders are finding new ways to trade with offshore brokers.
The main issue is the relative naivety of the local trading population with binary options. OJK needs to do more in terms of consumer education to enable local traders make informed decisions on whether to trade binary options at all, and how to separate the genuine brokers from the scam operators.