Not all of the binary options brokers we recommend are regulated, but a fair few of them are. Regulation alone does not create trust, but it certainly is an important consideration. What does it mean to say that a binary options broker is “regulated”? Quite simply, it means they are licensed by a relevant financial authority to operate as trade brokers. This is not the same thing as simply having a license to do business in their countries!
A lot of brokers will refer to a business license as if it is the same thing as regulation, but it is not.
Here are the regulated binary options brokers that we recommend:
- 24option: USA traders are not accepted. Licensed and regulated by CySEC, license #207/13. This was one of the first binary options brokers we ever recommended. Trade High/Low, One Touch, Boundary, and Short Term options, and take advantage of a lot of great training resources and trade tools.
- MarketsWorld: USA traders ARE accepted. Licensed and regulated by the Isle of Man Gambling Supervision Commission (GSC). License issued 6 April 2011. This is a unique binary options site where you can trade as little as $1. It does not get more flexible than that. They also offer extremely competitive returns.
- NADEX – 100% legal and regulated by the CFTC. U.S. Citizens only. (See my NADEX fact sheet here. If you are concerned about getting ripped off by a scam broker then you should open an account with NADEX and learn how to trade there. Full regulation by the USA’s CFTC.
- IQ Option: USA traders are not allowed. Licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC), under license #188/13. Additionally, IQ Option has reached out to financial authorities in almost all the member states of the EEA and has informed them that they offer services to residents of those states. IQ Option was not only one of the first binary options brokers to get regulated, but is also one of the first to be dedicated to working closely with financial authorities throughout Europe. IQ provides plenty of trade types and offers some of the most comprehensive training resources in the industry.
- BinaryRobot365: USA traders are allowed. Licensed and regulated by CySEC, license #216/13. This binary options robot allows you to trade High/Low, Boundary, One Touch, and Short Term trades with a huge number of brokers. Check out their site for amazing member benefits.
- Binary Mate: USA traders are allowed. Licensed and regulated by CySEC, license #092/08. Trade High/Low, One Touch and 60 Second options. Their platform also includes Option Builder and Pro Option. Resources include webinars, video tutorials, a guide to market indicators, and more.
- BOL Financial: USA traders are allowed at this infamous sportsbook licensed and regulated in Curacao. This broker offers High/Low options and 60 Second options, amazing resources, and a ton of exciting promotions and bonuses.
Just who are these financial authorities, aka the Regulators?
- Cyprus Securities and Exchange Commission (CySEC): This is the financial regulatory agency of the Republic of Cyprus where numerous binary options brokers are based. They operate under the European Markets in Financial Instruments Directive (MiFID). MiFID regulates investment services across the European Economic Area (EEA) which includes the EU and a few other countries. CySEC’s requirements for regulation are a little looser than a lot of other European financial regulators, but the fact that they operate under MiFID means that customers throughout Europe can trade on licensed sites and enjoy CySEC protection.
- Isle of Man Gambling Supervision Commission (GSC): This is an independent corporate body founded in 1962. The commission protects gamblers online by ensuring that services offered by license holders are crime-free, legitimate, and fair. You may be familiar with the GSC if you have ever played at online casinos; the popular casino PokerStars is another license holder which is regulated by the GSC. While binary options trading is an investment activity, it carries a high element of risk, which means that it overlaps with the gambling industry. This is why the GSC is a suitable regulatory agency.
- Malta Gaming Authority (MGA): Like the GSC, the MGA is an independent regulatory body responsible for overseeing and governing online gaming activities as well as traditional offline gambling in brick-and-mortar establishments.
Other key players:
- US Securities and Exchange Commission (SEC): This is a financial agency in the USA responsible for enforcing federal securities laws, regulating the industry, and overseeing the stock and options exchanges in the country.
- US Commodity Futures Trading Commission (CFTC): This independent regulatory agency was established in 1974, and regulates the option and futures markets in the USA.
While you are not going to see binary options brokers regulated by either the CFTC or SEC, you will see their names plenty. They don’t take too kindly to binary options brokers because of the huge quantity of scams out there. This unfortunately causes them to shut out legitimate companies from doing business with USA traders as well.
Benefits of Regulation
Let’s talk about the benefits of dealing with a regulated binary options broker. Why is it important? The main reason to do it is because it can provide you with confidence and trust in your broker. Each broker that is regulated by CySEC or another financial authority is meeting the stringent requirements to hold a license. Those requirements protect you, the trader. They ensure you are being offered a quality product and that the market prices you are receiving are fair. They also ensure you will receive your winnings in a timely fashion.
Disadvantages of Regulation
Are there any drawbacks to regulation? Unfortunately, yes. Despite the fact that regulation can be a great asset which protects the trader, it can also make it impossible to trade if you happen to be located in the USA. CySEC is particularly strict about this, and will not permit their regulated brokers to offer services to USA customers at all.
This all has to do with regulations by the CFTC and SEC. In theory, those regulations should only stop US traders from dealing in currencies and commodities on binary options platforms (not stocks and indices), but the CFTC has dealt pretty harshly with some legit companies in the past. As a result, most regulated brokers err on the side of caution. That is why the only binary options broker on the list above that allows USA traders is MarketsWorld, which notably is not regulated by CySEC.
What do we recommend if you are a USA trader? Thankfully there are some great binary options brokers out there that are intent on continuing to offer their services to traders in the US. Some of these include unregulated brokers like Boss Capital, Redwood Options, and CherryTrade. And do not forget that you can always trade at MarketsWorld, which is a great choice anyway, since they offer such flexible services.
No matter where you are located, there are a handful of excellent websites where you can trade binary options online safely—regulated or not. Check out our list of Top Brokers and click through to view detailed reviews on each. Happy trading!