The Way Forward for Traders in Nigeria
Nigeria is the largest economy in Africa. One thing the country has going for it is its population, as well as the demographics of that population. The population of Nigeria is expected to surpass that of the US in 2030, given the current population growth rate. More than 60% of this population is below the age of 45 years. Traditionally, Nigeria is a society which is slow to embrace new products, but once it does, the popularity of that product spreads like wildfire. This revolution was seen in forex, and is now being seen in binary options and cryptocurrency trading.
Binary Options trading in Nigeria
Nigeria does not have a locally-based binary options broker. Those who trade binary options in Nigeria therefore have to rely on the services of offshore brokers 100%. Binary options trading began to make in-roads into the country in 2010 with the entrance of Betonmarkets (now Binary.com) as the first broker. This broker made significant efforts to attract a large number of clients by working with local affiliates and also partnered with several companies to provide deposit and withdrawal services in the local currency as well as with digital currencies such as Liberty Reserve.
“The US clampdown on Liberty Reserve in 2013 hit the industry hard. Many traders had monies trapped permanently with the payment agents.”
Many of these payment agents were also forced to close down after the FBI seized and shut down their websites and online payment portals. These events, coupled with the activities of unregulated scam brokers, who duped many local traders caused a dampening of interest in this market.
In 2015, the binary options market in Nigeria began a slow resurgence, buoyed by implementation of stricter regulation of binary options brokers across several jurisdictions. The expansion of operations by payment companies such as PaySafe Ltd (owners of Skrill and Neteller) and PayPal to include Nigeria as part of their service areas, provided means of payment that was unavailable to Nigerian binary options traders prior to the LR clampdown. This also helped to improve participation of Nigerian traders in binary options.
Presently, there are no laws prohibiting binary options trading and no country regulation. Nigerian binary options traders are free to trade with offshore brokers in several jurisdictions except the US, Japan and Australia.
Currency Pairs & Spread
When it comes to what currency assets are traded on binary options brokerage platforms, Nigerian binary options traders have access to major, minor and exotic currency pairs. Availability of pairings will depend on what each individual broker has to offer. European-style binary options do not assign spreads to currency assets. However, Call options are purchased by trader at the ask price, and Put options are sold at the bid prices.
These prices are usually not displayed on the binary options platforms, but are used in determining payouts on expiry of trades, especially when trading the short term options where one pip can make a difference between making or losing money.
The bulk of binary options brokers that service Nigerian traders are located in Cyprus and the Isle of Man. Majority of Cypriot-based binary options brokers use turnkey platforms developed by companies such as SpotOption, Tech Financials, Tradolgic, Hello Binary and O-Systems.
Nigerian clients have been using binary options bonuses for as long as they have been around. However, changes by regulators in Cyprus regarding the issuance of bonuses by the top binary options brokers look set to change all that.
Deposit and withdrawal options
What deposits and withdrawal are available to binary options traders in Nigeria?
- Cards: Cards issued by MasterCard and VISA are the only brands of credit/debit cards available in Nigeria. Presently, only dollar-denominated cards issued by local banks and secured with tokens can be used to deposit and withdraw funds. Deposits are processed instantly, but withdrawals take up to 2 days to process. Cards denominated in the local currency are not enabled for online use on binary options platforms.
- Bank wires from domiciliary accounts are a method universally available to binary options traders in Nigeria.
- Digital wallets such as Skrill, Neteller and Payza are also available to Nigerian binary options traders with some level of restrictions. Withdrawals made with Skrill and destined for a local bank account can be performed only in the local currency. Foreign currency withdrawals using Skrill and destined for a domiciliary bank account must be done in Euros only.
Legality & Regulations
What are the legal considerations and regulatory conditions attached to the conduct of the brokerage and trading of binary options in the Nigeria? Binary options in Nigeria are not regulated. Trading of binary options is not restricted, and Nigerians are free to trade with offshore brokers.
In terms of financial market investments, the Nigerian regulator has been very slow in adopting some of the investment outlets that are widely available in other countries. The Nigerian Securities and Exchange Commission only regulates the local stock and bond markets. It has no role in regulation of binary options.
The Central Bank of Nigeria has monetary restrictions in place to protect the local currency, which still operates in a fixed exchange rate environment. Traders are not allowed to transfer more than $10,000 in a single transaction, while withdrawals that exceed $10,000 can by law, be flagged and withheld by the local banks until satisfactory evidence of the source of funds is provided.
Here are the frequently asked questions that most Nigerians have about the conduct of binary options in the NIGERIA.
- Are binary options legal in the NIGERIA?
Answer: The trading of binary options is legal in Nigeria.
- Is it safe to trade binary options in Nigeria?
Answer: The Lack of regulation of binary options means that scrutiny of the legion of binary options brokers that market their products to potential clientele in Nigeria is left to the traders. Many of these traders are not well educated on how to screen binary options brokers. This is where the challenge lies. Therefore, it can be said that it is safe to trade binary options in Nigeria only if the top binary options brokers that are regulated and have good track records are employed.
- As a Nigerian citizen, am I allowed to trade binary options with offshore brokers?
Answer: Nigerian traders can trade with offshore brokers located in Cyprus, Malta and the UK (selected brokers). Nigerian traders are barred from trading with brokers in the US, Japan and Australia.
- Do Nigerian binary options traders have to pay tax on the proceeds of binary options trading?
The Federal Inland Revenue Service expects all Nigerians to pay tax on a self-declaratory basis. Profits earned from binary options are subject to capital gains tax. Payment of capital gains tax by individual traders can be postponed if the proceeds are reinvested in the financial markets from where the profits were earned. Corporate trading of binary options is exempt from capital gains tax.
- Are Nigerian binary options traders allowed to use digital wallets?
Answer: Nigerian binary options traders are allowed to deposit and withdraw funds using Skrill, Neteller, Payza and a host of other digital wallets.
- Is it possible for binary options traders in Nigeria to transact on binary options platforms using PayPal?
Answer: PayPal is not available on the top binary options platforms except those in the US (where Nigerians are barred from trading). So technically speaking, Nigerian binary options traders cannot use PayPal in depositing or withdrawing funds on their platforms.
Best Binary Options Brokers in Nigeria
As described earlier, there is no binary options broker with a physical presence in the country. All binary options trading activity is performed with offshore brokers, most of whom are based in Cyprus. The top binary options brokers are as follows:
The article has explained the state of binary options in Nigeria, and traced its evolution at the start of the decade to the present day. The conditions that binary options traders in Nigeria face has also been discussed, as well as existing regulations controlling binary options trading in Nigeria.
Nigeria has a very huge potential in terms of expansion of the binary options market. Binary options brokers can cash in on this to open local branches in Nigeria. There is also a big market for payment providers who can provide transaction services that provide alternatives to existing binary options payment solutions in Nigeria.
For Nigerian binary options traders, it has been a slow and evolving journey, but one which is proving to be worthwhile.