ARE BINARY OPTIONS LEGAL?
Binary options are a “all or nothing” investment where a side wins while the other part loses depending on the outcome at the time of expiration.
Binary options are legal and must be traded on the regulated United States exchange, the Designated Contract Markets. The three DCMs that deal in binary options in the United States are the;
- North American Derivatives Exchange Inc
- Cantor Exchange, LP
- Chicago Mercantile Exchange, Inc
Unfortunately, several companies engaged in binary options are not registered under the Commodity Futures Trading Commission (CFTC). These companies do not adhere to the US regulatory requirements. Therefore, they have increased the level of complaints relating to binary–option fraud.
So before trading, you should get the registration background of the company you are about to trade with and avoid those that trade offshore because investors are less protected and stand the risk of being defrauded with them.
The RED list, which is also known as the Registration Deficiency list, has the names of the foreign entities that appear to act in a capacity that requires their need for registration with CFTC.
Companies that have not been registered are based offshore and there they are not under the same standard as compared to those that are based in the United States.
To start trading, you should be clear on these questions;
- Does the company have a base in the US?
- Have they been registered with the National Futures Association and CFTC
- Do they have their customers’ funds in a segregated account in any of the major banks in the US?
- Do you have easy access to your funds at any time or is there a limitation to binary option withdrawal?
- When a customer loses on the other side, is it to their advantage?
In case you still don’t feel secure, you may consider working with CFTC regulated exchange in the United States.