The development of the global financial market is inextricably linked with the emergence of new economic terms, promising trading strategies and effective tools for generating income. We will not focus on specific examples (to study them, just go to the site of any well-known broker), let’s move on to the main object of this study – binary options.

How binary options have become a popular online trading tool

Over the past 10 years, many traders, investors and other participants in financial markets believed that options were the result of the development of online trading, and their widespread use began in 2008 on the Chicago exchange. In fact, options appeared much earlier, in the 70s. last year, and 2008 can be considered the date of “birth” of binary options in the modern form.

The presented financial instruments first became popular in the USA and then became interested in options in Canada, the UK, Israel, etc. In parallel with the growing popularity of binary options, the basic principles of trading these instruments were formed, special exchanges were created, and also institutions that regulated binary brokers and other financial market participants working in this direction.

At the initial stage of development of binary options, the owners of brokerage companies quickly realized that this financial instrument is a real Klondike! It is during this period that so-called “kitchens”, “bookmakers”, etc. appear. Brokers are actively using options to generate huge profits. Many of them did not withdraw clients’ money to specialized exchanges, keeping them for themselves, and to maintain the image of a “good company” they made all the calculations with traders using the money of new clients.

Employees of the Israeli financial market regulator (ISA) first drew attention to the methods of work (more precisely, to fraudulent schemes) of brokers who specialized in operations with binary options. Rather tough laws were passed (even criminal liability was provided for violations in the financial sphere), which did not allow brokers to deceive their clients.

Despite the above factors, binary options very quickly became popular in different countries of the world. Many users (especially those who did not have an economic education) were happy to register on trading floors that provide access to binary options. A simple algorithm for conducting operations with the presented tools included the following steps:

• An asset is selected (currencies, commodities, stocks, etc.).

• Sets the expiration time (option expiration date).

• And the direction of the change in the value of the asset is predicted (up / down, will remain within the “corridor” or leave it).

One of the advantages of binary options is the ability to know the amount of income / loss, even before the start of the operation.

Since 2017, EU residents have been actively complaining about binary options brokers, accusing them of fraud. As a result, one of the most authoritative regulators in Europe, ESMA, initiates a total ban on binary options.

 

Popularity of binary options

 

Attitude to binary options in different countries

A complete or partial ban on binary options is observed not only in the EU, but also in many other countries:

• In Israel, this segment of the financial market is completely prohibited.

• In the Middle East, you can enter into transactions with options without violating the law (brokers receive a license in Cyprus).

• In many African countries, there is a rapid increase in the popularity of binary options, but almost everywhere, except for South Africa, there are partial restrictions on options transactions.

• In Malta, this activity was controlled for a long time by the Gambling and Lottery Administration, but since 2016, options transactions have been recognized as financial transactions. That is, brokerage companies had to buy MFSA licenses, but the conditions put forward by representatives of the regulator are constantly becoming tougher. Analysts say that very soon it will be easier for brokers to give up options and not spend their time and money to obtain a license.

• In the US, the activity in question is allowed only on specialized exchanges (with a large number of restrictions).

• As mentioned above, the residents of the EU categorically refused binary options. But many owners of brokerage companies find an opportunity to meet the demand for the services in question (registration in offshore zones, opening of subsidiaries).

• On the territory of the former socialist republics, the financial operations in question are in a “suspended” state. On the one hand, there are no laws prohibiting binary options, but on the other hand, such activities are not regulated at all, and this can always be used against the organizer of a brokerage company.

In which countries binary options are popular

Many analysts and financiers argue that the decision to ban binary options in the EU had a negative impact on the economy of European countries. In principle, no one doubted that administrative methods in this case, can not bring any benefit.

Over the past years, Qatar, Singapore, Georgia, Slovenia, Hong Kong, Nigeria, Kenya and others have been included in the list of countries with the largest deposits (in the binary options segment).

Residents of the EU who are interested in trading in binary options are looking forward to the end of the first quarter of 2019. In April of this year, the main financial regulator ESMA should decide on the future of the financial market segment under consideration.

TRADE OPTIONS

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Study: the popularity of binary options in different countries
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