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Binary options trading

Binary options are a form of bet where you try to predict the outcome of events in financial markets. For example, whether a company's stock price, or a foreign exchange rate, will rise or fall over a defined period (sometimes as short as 60 seconds). 

The use of the word 'binary' refers to the fact that there can only be two outcomes to the bet. If your prediction is right you win the bet; if your prediction is wrong you lose.

We regulate businesses offering binary options if they have remote gambling equipment located in Great Britain. 

Licence holders are required to make it clear on their websites, that they are licensed by us, whether or not they hold other licences issued by other regulators. You can check our licence register to be sure you are gambling with a licensed operator. 

Unlike other forms of remote gambling, those offering binary options with all of their remote gambling equipment located outside Great Britain do not have to be licensed by us. This means that, although consumers in Great Britain are able to use the services provided by these operators, we do not regulate them. They may, however, be regulated and/or licensed in other jurisdictions. 

Changes to the regulation of binary options

The regulation of binary options is likely to change in the near future. HM Treasury has published a consultation which sets out the government’s proposed amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. This would transfer the regulation and supervision of binary options to the Financial Conduct Authority (FCA). 

The FCA already regulates spread betting (contracts for difference on financial markets) and other financial products which may resemble binary options, such as Collective Investment Schemes.

The risk from unlicensed operators

There is a risk that arrangements which resemble binary options betting or other financial investments could be scams. Look out for the following warning signs:

If something sounds too good to be true, it probably is

Be suspicious of ‘too good to be true’ schemes, such as promises of unrealistic returns on an investment. There are no guaranteed get-rich quick schemes.

Beware of cold-calling

If you have not requested contact you should not give them any personal information. Do not agree to any deals immediately and insist on time to obtain independent/legal advice before making a decision.

Beware false claims about who regulates an operator

Businesses offering binary options that have remote gambling equipment in Great Britain need to be licensed by us and are required to display this on their website. To check whether a company holds an operating licence search the licence register on our website. 

Businesses that are not regulated by us may be licensed in other reputable jurisdictions, most of whom will have similar online registers. You should check before registering an account.

If the company is unlicensed, consider carefully whether to use them

An unlicensed company may be acting illegally. They will not be required to abide by any code of conduct and there is no incentive for them to deal fairly with you. 

It is easier for unlicensed companies to use false names, addresses and contact numbers and to disappear with your money. 

Also keep in mind that, just because a business is registered with Companies House, this does not necessarily mean the business itself is operating legally. 

Companies House is not regulator and does not verify the legitimacy of company operations. 

If you lose money the Gambling Commission cannot recover it for you or compensate you. 

If you think you have lost money after using an illegal, unlicensed operator, it is recommended that you contact Action Fraud, either through their website or on 0300 123 2040.