Binary options are only a few years old, so it is not surprising that regulation in this industry is only in its beginnings. Most of the binary options brokers are located on Cyprus or the British Virgin Islands. The Cyprus Securities and Exchange Commission (CySec) decided only in May 2013 that it will regulate the binary options industry.
To this date we know only about one regulated binary options broker, it is Banc de Binary. It’s got its CySec license in January 2013. So if you want to trade regulated binary options, go with this broker.
However, the CySec requires all brokers located on its territory to get a license, so we can expect that during 2013 there will be more and more regulated binary options brokers. We will regularly update this list of regulated binary options brokers.
But when talking about binary options regulation, you should know a few things about regulation in general. Financial regulation imposes certain rules that a broker has to follow, one of the most important being about clients‘ funds that have to be kept on segregated bank accounts.
In general it is of course better to trade with a regulated binary options broker, but we have to say that it doesn’t represent a 100 percent guarantee. Because as we saw not long ago with Peregrine Financial and MF Global, brokers can fail even when regulated in the US. For example MF Global was apparently able to fool financial regulators just by creating false bank accounts statements with the help of Photoshop and a printer. In the meantime they took about $200 millions of clients‘ money.
So even if binary options regulation is very welcome, you should know that the best testimony of a binary options broker’s reliability are its clients. That is why we do not only monitor regulated binary options brokers, but we also monitor feedback from traders across different discussion forums. And based on this feedback and experience we update this list of best binary options brokers with the the best reputation.