Binary Options Trading in Netherlands
Netherlands is one of the more liberal European economies. To what extent does this liberality extend to the binary options market? Not very much, as you will find out shortly.
Netherlands’s financial markets are regulated by the Authority for Financial Markets (AFM). The AFM recently detailed its new policies on forex and binary options trading; financial assets that are derisively categorised by the AFM as “toxic financial products”. If you wondered if the Netherlands was as liberal with financial products as it is with other aspects of its economy, you now have the answer. The AFM has come out tough on binary options.
Under the new rules, the Dutch financial regulator has proposed the following restrictions on binary options trading in Netherlands.
- The AFM has proposed a total ban on the advertising of toxic financial products that offer more than 10X leverage. This rule is actually quite nebulous and seems to target the forex market and not the binary options market, as binary options are actually an unleveraged market.
- The ban extends to offshore brokers that market binary options in Netherlands, as well as local branches of foreign firms operating within the borders of Netherlands.
This example follows that of France, which has already commenced enforcement of the binary options advertising ban placed there by regulators. It is presently unclear how the AFM intends to enforce the ban on binary options ads by offshore binary options brokers. While binary options brokers in Netherlands may be within reach of the AFM and enforcement may therefore be easier, the same cannot be said of offshore brokers, who have means by which they promote their products that cannot be easily blocked.
The regulation of the financial markets in Netherlands is carried out by AFM. The AFM considers binary options as a toxic financial asset, and has therefore opted not to approve any brokers to offer this product. At the moment, no binary options broker in the Netherlands has an AFM license to offer this product.
Currency Pairs & Spread
Many Dutch citizens currently trade binary options with offshore brokers, with majority of these being Cypriot-based brokers. There is a wide array of Euro-based asset: Euro currency pairs, stocks listed in various European exchanges as well as the Eurostoxx and other stock indices.
Bid/Ask price quotation systems are not used in the pricing of assets, but they are considered when determining the expiry value of the assets used for trading binary options contracts.
A mix of proprietary and turnkey trading platforms will be encountered by Dutch binary options traders, with a strong predisposition towards the use of turnkey platforms designed by SpotOption, Tech Financials and Tradologic.
Dutch traders who use Cyprus-based binary options brokers will no longer receive any bonuses when they sign up with these brokers as a result of the CySEC bonus ban.
Deposit and Withdrawal Options
What deposits and withdrawal options are available to binary options traders in Netherlands in the face of the new restrictions?
There is no information to indicate that banking and card services for remittances to binary options brokers are being denied Dutch traders. So the following transaction methods are available to these traders:
- Bank wires: Dutch traders are able to use bank wires to perform transactions on binary options platforms. Banks like ABN Amro are banks which are very active in the financial market as liquidity providers.
- Digital wallets: The use of local digital wallets, especially that of Dutch brand iDeal is very popular with retail traders. The top binary options brokers that serve Dutch clients offer iDeal on their platforms.
- Card Options: In addition to the traditional credit and debit cards issued by MasterCard and VISA, there are prepaid cards issued by Skrill and Payoneer, which can be used by Dutch traders to deposit trading capital with binary options brokers.
Legality & Regulations
What are the legal considerations and regulatory conditions attached to the conduct of binary options brokerage and trading in the Netherlands? Binary options in Netherlands are classified under financial derivative instruments. The AFM regards these instruments as being too risky for Dutch citizens to trade. However, the scope of the ban by the AFM only covers advertising of binary options. It does not cover the actual trading of binary options, which leaves a lot of room for loopholes to be exploited by the binary options brokers being targeted by these new rules. In Belgium, Netherlands’s next door neighbour, the rules are pretty explicit on what is and what is not.
At best, what the AFM is trying to do is not to turn the tap off, but to plug a leak in a water hose; there is every chance that a leak will spring up elsewhere.
Here are the frequently asked questions that most users may have about what the binary options industry in Netherlands looks like.
- Are binary options legal in Netherlands?
Answer: The trading of binary options in Netherlands can best be described as restricted, but not outlawed. This is because there is no law banning Dutch citizens from trading binary options. The law only targets the marketing of binary options; a move which is broker-centric, not trader-centric.
- Is it safe to trade binary options in Netherlands?
Answer: Netherlands presently does not present a safe place to trade binary options. With the ad bans in place, there is always a tendency that a total ban can be enforced.
- As a Dutch citizen, am I allowed to trade binary options with offshore brokers?
Answer: The AFM does not approve of Dutch citizens trading binary options with offshore brokers.
- Can the AFM help me with my check of the status of a binary options broker?
Answer: The AFM does not have the resources to aid with due diligence of offshore binary options brokers. The AFM wants all trading activity with ALL offshore brokers to cease.
- What is the AFM?
Answer: AFM stands for Authority for Financial Markets. The AFM is the regulator of the financial markets in the Netherlands.
Best Binary Options Brokers in Netherlands
Binary options brokers in Netherlands may find themselves caught up by the new rules, as they are well within reach of the AFM in terms of enforcement of the “no binary options ads” rule. The AFM is not granting any licenses to binary options brokers in Netherlands. Branches of offshore brokers that function as Netherlands binary options brokers may be forced to relocate. Many Dutch binary options traders are still doing business with offshore brokers. If you are a Dutch binary options trader, you may benefit from the list of brokers shown below. These are regulated offshore binary options brokers, so this cuts the level of risk you are exposed to when seeking brokers to do business with.
Netherland has joined the list of countries that have opted to place some sort of prohibition on binary options. However, there is some lack of clarity as to the techniques that the Dutch regulator wants to employ. Merely banning the advertising of binary options may not be enough for the AFM to achieve its aims. Offshore brokers will always have some way of targeting prospective clients in Netherlands, and with the demand for binary options rising within the Dutch trading population, it may be difficult for the AFM to achieve its aims.