UK Binary Option Brokers
Who are the binary options brokers in the UK? For us to answer this question, we need to understand the structure of binary options in the United Kingdom.
Contrary to most reports, the binary options market is not regulated by the Financial Conduct Authority; at least not yet. Binary options are regarded as a form of financial betting, so binary options brokers in the UK are actually regulated by the UK Gambling Commission. This may change in the future, as there is serious consideration to transfer the regulation of such products to the Financial Conduct Authority, copying the Malta example.
Regulation of binary options in the UK is extended to both binary options operators (brokers) located within Great Britain and companies that maintain a physical presence of key equipment used in this market within Great Britain.
By law, all binary options brokers in the UK must make it clear, on their websites, that they are regulated and provided licensing by the Gambling Commission, irrespective of whether they are licensed by other regulators. So we expect that for every binary options broker in the UK, there will be a statement which indicates that they are regulated by the UK Gambling Commission and the license number will also have to be stated clearly.
By the definition of this law, offshore binary options brokers do not require a Gambling Commission license to do business with UK customers and expects that these brokers must be regulated in their home countries.
This is because the UK fully recognizes the European regulations on financial instruments and operators known as MiFID II, so the Gambling Commission respects the authority of home-based regulators for each offshore regulator trying to acquire clientele in the UK.
Transfer of the responsibilities of regulating binary options brokers in the UK is to be effected by replacing the provisions of the 2005 Gambling Act which classify binary options as a form of betting, and re-classifying binary options as a financial product under a new law known as the Gambling (Licensing and Advertising) Act of 2014. The transfer of regulation of binary options brokers in the UK to the FCA will have far-reaching implications for traders.
- Binary options traders will start to enjoy the protections that are offered by the UK’s financial services regulatory framework.
- Binary options brokers in the UK will have to contribute to the Financial Services Compensation Scheme (FSCS). This scheme allows clients of regulated financial firms, to receive financial compensation of between 50,000 and 85,000 GBP on unpaid claims made against them.
How to Check the Status of a UK Binary Options Broker on the Gambling Commission’s Public Register
The snapshot above displays the UK Gambling Commission’s public register of licensees where it is possible to know if a binary options broker in the UK has a license from the Gambling Commission. Here is an example for IG Index.
We can see clearly the “Active” status shown beside the IG Index website information. If a broker is not in good standing with the Gambling Commission, then any of the following classifications could be used to describe such a binary options broker in the UK:
Each status will be displayed on the search of the broker in question. Traders can decide on checking on lists of binary options brokers in the UK on the basis of status or gambling sector.