Category Archives: Binary Options Regulation

Cantor Exchange is a U.S. CFTC regulated binary options broker.

U.S. CFTC Approved Binary Options Cantor Exchange

A First Look Review Of Binary Options At Cantor Exchange

Now there is another choice for CFTC regulated binary options. Cantor Fitzgerald has extended it’s offerings for U.S. traders by adding binary options to it’s portfolio. Through it’s subsidiaries Cantor Clearing House and the Cantor Exchange CFTC regulated binary options are available. This market place has been around for a little while but has only recently moved into binary contracts. The Cantor Exchange is a Designated Contract Market and operates alongside and the Cantor Clearing House.

  • Cantor Exchange – The Cantor Exchange is a Designated Contract Market certified and regulated by the CFTC. This makes it one of only a few U.S. regulated binary options markets. The Cantor Exchange operates a marketplace for buyers and sellers to meet and trade options. The exchange enforces rules and regulations, provides the trading platform, matches buyers and sellers and supervises all actions of market participants.
  • Cantor Clearing House – is another subsidiary of Cantor Fitzgerald and is a Registered Derivatives Clearing Organization. As the clearing organization for the Cantor Exchange it is responsible for settling all trades made on the exchange. The Cantor Clearing House is the equivalent of the OCC used by other U.S. derivatives exchanges.

Exchange Versus Broker

Cantor Exchange is CFTC regulated binary options

Cantor Exchange is CFTC regulated binary options

The Cantor Exchange is a binary options exchange, not a broker. This is important to understand. European style, off-shore, CySEC and other types of binary options brokers are not the same. When trading on the Cantor Exchange you are trading with other traders, not the house. When you are trading binary options with an off-shore broker you are betting against the house and you know what they say. The house always wins.

In order to trade on the Cantor Exchange you have to be a member. Memberships are easy and available to U.S. residents (I’m not sure but I think Canadians are welcomed as well). After filling out the online application memberships are processed within a matter of days. Members are referred to as Individual Trading Participants and have access to all the available options. The platform is online, web based and also on mobile. Web based traders will have to have Adobe Flash. Mobile traders can use iOS or Android operating systems. Since their focus is primarily for mobile traders that platform is much better than the online version. In addition, membership in the exchange is open to non-U.S. traders as well so they can also benefit from CFTC regulated binary options.

Cost Of Trading On The Cantor Exchange

Trading on the Cantor Exchange is easy. The minimum deposit is only $100 and the fees are low, really low when compared to the percentages kept by off-shore binary options brokers. Each trade costs a mere $0.90 per contract/lot. If you trade at market price there is no fee but I don’t recommend this. You may save the 90 cents but you may lose more than that on trade execution. If you place a limit order and it executes at market then you still save the 90 cents and have protected yourself from a wildly moving market. Closing a trade is just as inexpensive. Out-of-the-money options will expire and incur no fees. In-the-money options cost $0.90 to close and at-the-money options cost only $0.45. Other than that the only other cost of trading is an account fee for inactivity. If you don’t trade for 2 months it will cost you $2 per month for account maintenance.

Withdrawals From The Cantor Exchange

Withdrawals are super easy on the Cantor Exchange. Because it is a U.S. based and CFTC regulated binary options exchange your money is always available. Withdrawals can be made at any time and are only limited to the normal banking hours. A request made today processes the next business day. Minimum withdrawal is $100 or the account balance, whichever is lower.

Trading On The Cantor Exchange Platform

Trading on the Cantor Exchange Platform is good. The exchange has several intra-day expiries available. At this time the exchange is limited to three assets so it may not be as attractive as NADEX or an off shore broker in that respect. Currently the exchange has options on three currency pairs and that’s it. The pairs are EUR/USD, GBP/USD, and USD/JPY. These are the three top traded currency pairs so for now that’s OK for now. According to my sources within the exchange they are planning on expanding their product offering in the fall. Just exactly what that means is still unknown but any additions to the list will only make Cantor Exchange better. Expiry is also a bit limited at this time. They have options ranging from 5 minutes to end of the day. These will suit most binary options traders just fine unless they use a longer term strategy as I do.

U.S. regulated binary options trading at Cantor Exchange

U.S. regulated binary options trading at Cantor Exchange

For More Information Click Here To Visit The Cantor Exchange

Cantor Exchange Scam

Cantor exchange is not a scam. It is a licensed and regulated binary options exchange operating in the U.S. As an exchange regulated by the CFTC it must match buyers and sellers together and allow market pressure to dictate prices. It is still possible to lose a lot of money making bad trades but that does not make Cantor Exchange or binary options a scam. The exchange makes it money by charging a set fee for each transaction, not a percentage of the traded amount like off-shore binary options brokers. Withdrawals can be made at any time and are not impacted by minimums, maximums or fees.

Several different countries regulate binary options

Untangling Binary Options Regulation

How And Where Are Binary Options Regulated

Regulation is an important topic among binary options traders. Some are for it, some are against it. Some brokers choose to be regulated and others have moved so they won’t. Some brokers may be avoiding regulation for bad reasons, the kind of reasons that raise questions of honesty, others to avoid limitations imposed by regulation. Not all regulated brokers are good and not all unregulated brokers are bad so how do you know the difference? Choosing the right binary options broker is the most important decision a binary options trader can make and know the differences between brokers is crucial to making that decision.

It is important to check into your local laws before choosing a binary options broker. Some politicians and countries are against the practice and taking steps to block or ban binary trading. Most recently Italy made a move to begin banning binary options broker IP’s, Japan is another. Italy seems to be blocking only non-CySEC regulated brokers at this time. Japan is still in the process of creating laws to govern the industry but is allowing previously established brokers to operate.

CFTC Binary Options Regulation

CFTC regulates US binary options

CFTC regulates US binary options

The CFTC regulates binary options in the U.S. along with the OCC and the SEC. The CFTC is mandated by the Commodities and Exchange Act to protect U.S. citizens from fraud, to regulate trading instruments and service providers and to ensure fair play. At this time there are only three sources of CFTC regulated binary options in the U.S. These are NADEX, AMEX and CBOE. AMEX and CBOE binary options are traded alongside regular stocks and options on the major exchanges. The problem with them is that not all brokers choose to list them. NADEX is the North American Derivatives Exchange and is the only true binary options exchange legally operating in the U.S. NADEX binary options are different than European style binary options but come with many advantages. Click here for more on the advantages of NADEX binary options.

CySEC Binary Options Regulation

CySEC regulates binary in the EU.

CySEC regulates binary in the EU.

After the rise of binary options industry the Cyprus Securities and Exchange Commission decided to officially recognize binary options as financial instruments. This allowed them to impose regulation on the industry which largely resides on the island. The loose banking laws that attract off-shore money to Cyprus also attracted binary options brokers. CySEC regulation holds binary options brokers accountable through third party oversight and the possibility of sanction. As an added bonus because of Cyprus member status in the European Union CySEC regulated binary options brokers are recognized as financial services throughout the EU and the European Economic Arena. This means that CySEC brokers can operate in any EU country through the economic passport laws. CySEC regulation is being sought after by most of the top binary options brokers but it does come with at least one handicap. CySEC regulated binary options brokers can not market to U.S. citizens. There are a couple of CySEC brokers we recommend: 24Option, Banc de Binary and Anyoption. Banc de Binary is currently regulated, 24Option and Anyoption are in the final stages. My top binary options broker is 24Option because of the high level of customer service, video center, webinars and extensive list of assets and expiries. Since the addition of the new 2 and 5 minute options 24Option now has expiries ranging from 60 sec to end of day, end of week and end of month.

FSA Binary Options Regulation

fsa logoThe FSA is the Financial Services Authority of Great Britain. This is the official regulatory body for all financial services, instruments and providers in the United Kingdom. The FSA was the first regulatory body to recognize a CySEC regulated binary options broker outside of Cyprus. Banc De Binary was the first but is surely not going to be the last. As each Cyprus based binary options broker achieves regulated it will likely move on to FSA and other certifications as well. At this time there is only one FSA registered binary options broker, Banc de Binary. BDB is the best UK binary options broker simply because of the high level of regulation. BDB also has an extensive list of assets and expiries ranging from 60 second to the end of the year.

BaFIN Binary Options Regulation

BaFIN logoBaFIN is the financial regulatory agency of Germany. This agency oversees the financial industry and has accepted CySEC regulation in a similar fashion to the FSA. Binary options brokers can seek official regulation from BaFIN once they get CySEC approval. CySEC approval is key for this move since it is the step that gets a binary options broker officially recognized as a financial services provider. One way to avoid BaFIN, FSA and CySEC regulation is to headquarter a binary options broker somewhere in Europe such as Germany where it can be classified as a European Investment Firm providing Ancillary Services. Banc De Binary is proving its commitment to the binary options industry by obtaining BaFIN regulation as well. It is currently the only BaFIN regulated binary options broker.

BVI FSC Binary Options Regulation

fsc logoThe British Virgin Islands Financial Services Commission is yet another international agency with some oversight of the binary options industry. Banking laws in the BVI are among the loosest in the world which has given rise to its attraction as an off-shore banking center and base for spot forex brokers. Brokers with this designation are primarily forex brokers with a small offering of binary options. There are a few exclusive binary options brokers operating here. The status of binaries in the BVI is unclear, OptionsClick is advertised as a BVI FSC broker by some websites but there is no listing for it or its parent company on the BVI FSC register. Be sure to check your local laws before choosing a BVI binary options broker.

Isle Of Man GSC Binary Options Regulation

The Isle Of Man is a small island between Ireland, Scotland and England. It is another attractive location for international business due to its easy legal requirements. One industry that has flourished here is the gaming and online gambling industry. The Isle Of Man GSC is the Gambling Supervision Commission. It issues gaming licenses and regulates the gambling industry headquarted on the island. One broker of note, Marketsworld, has been advertising that it is a UK regulated binary options broker. In a sense that is true but it is also misleading. Marketsworld is a regulated UK business but it is regulated as a casino and not as a financial company by the FSA.

NADEX In Europe And Australia

IG Markets, the parent company of NADEX, operates binary options markets in Europe and Australia. These markets are regulated by the appropriate regulatory agencies and are legal financial instruments. NADEX options are different than European CySEC style binary options and IG options are different from NADEX and CySEC. From what I have seen IG Market binary options are more complicated to use than NADEX or CySEC options. The major difference is the make up of the contracts. IG markets sells CFD’s or contract’s for difference. These are leveraged derivative trading instruments that have some properties of binary options and some properties of futures or spot forex. Another major difference from binary options is the possibility of loosing more than your original deposit.

Nadex is CFTC regulated

How Is NADEX Different From Other Binary Options

The North American Derivatives Exchange

nadex logoNADEX is the North American Derivatives Exchange. It is an offshoot of IG Markets, an international provider of CFD and other derivative instruments. Currently IG Markets operates in England, Europe and Australia providing traders a platform for trading. NADEX is the North American branch of this network and currently the only CFTC, SEC and OCC registered, licensed and regulated broker or exchange operating in the U.S. and North America. Regulation is important for binary options because it provides a base from which the industry can grow while building trust among traders and service providers. CFTC and SEC regulation is not the only kind of binary option regulation, just the only kind recognized acceptable in the U.S. at this time.

Binary Options Regulation

Several different countries regulate binary options

Several different countries regulate binary options

Other forms of binary options regulation include  CySEC, FSA, FSC, BaFIN and Isle of Man GSC among other local jurisdictions. CySEC has been leading the way in this regard. It is the Cyprus Securities and Exchange Commission and was the first to categorize binary options as a financial instrument. Because of CySEC’s work and member status in the EU CySEC regulated binary options brokers and service providers are able to reach traders throughout the EU and friendly nations through the Economic Passport.

Banc De Binary is one of the leading binary options brokers in this area although they still suck as a broker. BDB was the first to get CySEC regulation and subsequently FSA and BaFIN regulation. The FSA is the Financial Services Authority of England, BaFIN is the financial regulatory body of Germany. Other countries are also getting into the fray of binary options regulation. The FSC of the British Virgin Islands is one. This small island nation is one of the worlds banking/tax havens and a hot spot of the binary options industry. At this time there is no binary options broker, exchange or service legally operating in the U.S. besides NADEX and the limited binary offerings of the CBOE and AMEX.

  • Binary Options Regulation – Futures, options and derivatives trading is governed in the U.S. by the CFTC and the Commodity Exchange Act. Through its mandate to protect U.S. citizens from fraud and unscrupulous trading practices the CFTC has said that no unregulated options or other financial derivatives may be marketed or sold to U.S. citizens. This is why BDB and others have been shutting their doors to the U.S. The SEC’s stance is a little less clear and seems to provide a loophole a few brokers have seized upon.   These loopholes have lead some brokers to offer options on some assets but not on others, usually commodities.

    It seems clear to me that as regulation progresses in other parts of the world it will systematically shut down access to U.S. traders.  Regulation could change at any time and those loopholes could close at any time. CySEC’s recognition of binaries as financial instruments is great for the European and international markets but will eventually keep them out of the U.S. market. There are other sources of “off shore” binary options regulation such as ASIC, FSA and Isle Of Man GSC.

What Can You Trade At NADEX

There are some differences between NADEX and European style options that lie mostly in the types of options traded. With CySEC/European style binary options you can trade high/low, over/under, one touch, 60 second, range and 0-100 style binary options on all the major world indexes, currency pairs and commodities. At NADEX you can still trade all the same underlying assets but they are less types of options to choose from. There are only two kinds of options at NADEX, binary options and bull spreads.

Binary options are a fixed return, all or nothing trading vehicle with only two outcomes. If you win the option is worth $100, if you lose it is worth nothing. The price you pay for each contract will be somewhere between $0 and $100 depending on market conditions. If you pay $45 for an option and it profits you receive $100 for a net gain of $55-fees. Bull spreads trade like a covered call or options spread. They are binary outside the range but pay spot price within the range.

Nadex assets are easy to use and follow

Nadex assets are easy to use and follow

  • NADEX has binary options and bull spreads on all the major stock indexes, 8 major currency pairs, commodities and even some economic events. Each underlying asset is traded through a derivative binary options with an identical value. Some, but not all, have a different name. The S&P 500 is called the U.S. 500 and the EUR/JPY is stilled called the EUR/JPY.
  • Binary Options- NADEX binary options are all or nothing trading vehicles with expirations ranging from this morning to this afternoon, the close of todays session or the close of this weeks session. They are worth $0 or $100 at expiration. You choose from a list of possible strikes and expirations, pay market price and profit the difference. Market price will range between $0 and $100, comes with a bid/ask spread and fluctuates with the movement of the underlying asset.
  • Bull spreads- Bull spreads are similar to binary options but have some distinct differences. In essence bull spreads trade like a future mixed with an option spread. Outside the range of the spread the bull spread is binary, just like an options spread. If it closes higher than the range you get the maximum return, if it closes lower than the range you get the maximum loss. Within the range the bull spread trades like a future and is worth $1 per point. If the bull spread closes within the range but higher than your buy-in point you will receive the difference between your paying price and the spot price at expiration.

Trader Resources At NADEX

nadex webinars mayThere is a complete set of trader tools at NADEX. The set includes the basic information on trading binary options and bull spreads and other more advanced tools. The ongoing education series consists of daily webinars on subjects ranging from strategy to charting and psychology. The platform is easy to use but takes a little getting used to. Once you have taken the tour and gotten familiar with it you will have no problem. There are charts available but I still prefer to use my charts through OptionsXpress.

What Are The Differences Between NADEX and CySEC Binary Options

nadex order ticketLet’s compare NADEX and the general off-shore/European Style/CySEC binary options industry. European style CySEC regulated binary options brokers are not the same as NADEX for a variety of reasons. First, CySEC regulated binary options brokers are more like banks offering high yield investments. NADEX is more like the NYSE or the AMEX. The high yield investments, binary options, are sold directly from the bank(binary options broker) to the client (you). The binary broker makes money by keeping 70-100% of losing trades and a smaller percent of winning trades. Brokers try to keep their books even by matching buyers of puts and calls. When this is not possible they have even resorted to manipulating closing prices in order to keep themselves in the green. These aspects of the binary options industry is one of the reasons it has received so much criticism over the past few years and why there is so much risk of fraud and shady dealings from offshore brokers. This is also why CySEC came into play, to prevent fraud and provide a framework for fair dealing.

Second, NADEX is an options exchange. This means it is a market place, much like your local farmers market.A binary options market place is where binary options traders can come together to buy and sell options. The exchange charges a fee per trade in order to make its money and not a percentage.  The fees are inconsequential when compared to trading CySEC style binary options. NADEX charges $0.90 per contract with a maximum fee of $9 per trade. $100 at NADEX could buy you two contracts with a cost of $1.80. With CySEC if you trade $100 the broker may get $70-$100 of that money if you lose, depending on rebate structure. They may get as much as $20-$30 from the opposite side of the trade if you win.

This difference is one reason why CySEC style binary options are not allowed in the U.S. I know you are thinking to yourself right now if that is the case why are so many brokers still operating with U.S. clients. The answer to this is they are doing so at the risk of themselves and their clients. The CFTC has already shut down several brokers. The leading CySEC style binary options brokers are now shutting their doors to U.S. traders one-by-one as they receive regulation to protect themselves so be careful if you (American Trader) choose to use one.

nadex sell ticketThe third major difference between NADEX and CySEC/European binary options is tradability. CySEC binary options can not be sold (usually) before expiration and are only worth $0 or your predetermined return. NADEX binary options are highly tradable and can be bought and sold at any time prior to expiration. Since the price of NADEX options changes over time your profit or loss will be determined by the difference in opening price and closing price. Another great thing about NADEX binary options is that they can be sold short. That’s right, sold short. Unlike CySEC options which are only debit positions (buy a call if bullish, buy a put if bearish) NADEX options are either debit or credit. You buy the position if you think the market is moving up and will close above, you sell the position if you think the market is not moving up and will not close above. This reason alone makes NADEX more attractive to me simply because it opens up so many different types of strategies that can not be used with CySEC options.

  • The Greeks And Binary Options- The options Greeks Delta, Theta, Vega and Gamma have no bearing on binary options. They do play an underlying role on market value but are not present during trading. You do not have to worry about how far, how fast an asset moves while keeping one eye on volatility and another on interest rates. Binary options close in the money if they are above the strike price and out of the money if they are below it. They only have two values and you receive all or nothing at expiration.

Click Here For More Information On NADEX Binary Options Strategies

Are CySEC Binary Options Brokers Safe

CySEC style binary options and brokers are safe. Trading binary options is a viable method of speculating world markets and it can be done profitably. However, like all financial vehicles, especially highly speculative ones like binary options, they come with risk and should be approached with caution. Be sure to check into any broker before depositing money and make double sure of their withdrawal methods and requirements. I have three CySEC/European style binary options brokers on my short list of approved brokers. These are:

Binary Options Are Risky 

Trading of any kind is risky. I highly recommend that you spend as much time as possible learning about the financial markets, fundamental and technical analysis before you begin any trading. You should also consult a professional and make sure you have the resources to risk money on trading binary options. Binary options are not a get rich quick scheme, it is possible to lose your entire investment or account in one trade.