Some of you have surely heard some news, in the recent days. After some European Union countries banned the promotion of binary options (e.g. Belgium), European financial regulator ESMA (European Securities and Markets Authority = regulatory institution for Securities and Exchange Commission) banned brokers from giving out a bonus for deposits and ordered a faster processing of withdrawals from accounts.
The regulatory authority is, unlike CySEC, a supranational regulator that has a big impact on the functioning of national regulatory authorities of individual EU countries (such as CySEC or CNB). Now, they’ve issued a new regulation that will have a big impact on binary options and their brokers.
Changes in bonuses in binary options trading
ESMA doesn’t like brokers offering such high bonuses that are, moreover, linked with quite unfair terms. Perhaps everyone knows that after receiving a bonus you have to wager it. Some brokers require it to be wagered 30 times, some even 45x.
For new investors, who unwillingly take bonuses, this is often impossible. In addition, bonuses distort the view of the trading account balance and subconsciously encouraged to invest larger sums. This must change.
I don’t know how much pressure will the regulation make on brokers, so it’s hard to say whether brokers will actually obey. However, we can certainly say that, if they will, then only the regulated ones. List of regulated and trusted brokers can be found here: Binary Options Brokers.
I think, that unregulated brokers will offer bonuses to lure new traders – which is wrong because an inexperienced investor would choose an unregulated broker with a bonus and might never see the money again, instead of choosing a regulated and trusted broker.
Changes in the terms and conditions for withdrawals
Another change, required by ESMA, is regarding to withdrawals. A lot of times it happens, that the withdrawals take absurdly long – up to tens of days, even with regulated brokers.
I must say that, for instance, the broker Top Option doesn’t do its best – withdrawals take up to 4 days. However, who surprised me was IQ Option and Banc De Binary. Both brokers sent withdrawals in two days – I have received all withdrawals (about ten) from them very quickly. This may be because I like to use the e-wallet Skrill.
We must not forget that if you choose to withdraw money via bank transfer, you can still count with extra two to five working days until your bank processes the withdrawal.
Trade with the broker Banc De Binary or IQ Option
My opinion on changes
As I said, on one hand, these changes are good and make sense. But only if they applied to all brokers without exception – but it will never happen. Unregulated brokers are not really interested in such regulations and therefore they will continue cheerfully offering bonuses.
Inexperienced investors could then be joining untrustworthy brokers rather than the regulated and trusted ones, which could make the situation even worse, because you can’t really control these brokers. We’ll see how the situation develops.