Popular binary option brokers are not regulated by the SEC or CFTC in the United States. A regulated broker is almost always regulated by the Cyprus Securities and Exchange Commission which is a member of the European Union. Using a regulated binary options broker is not a guarantee that your funds are secure. CySEC is not the same as the US CFTC, and does not offer investors the same level of protection of their funds. It is questionable if CySEC offers protection to traders located outside of Cyprus, although EU countries recognize CySEC regulation as a proper financial authority due to their EU member status and the rules of Mifid.
The issue of broker regulation came to light during the Cyprus financial crisis in 2013. Many binary option traders were concerned about the safety of their trading accounts. The best option for a binary options trader is to contact a regulated broker and ask where trading account funds are deposited, and what guarantee, if any, the broker can provide to ensure your money is safe.
Traders should open accounts with two different regulated binary option brokers. Test out the trading platform, test the withdrawal procedures and ensure that it is easy to make withdrawals.
As a result of their efforts, they are now registered with the UK’s Financial Services Authority (FSA), the German Federal Financial Supervisory Authority (BaFin), the Spanish Comision Nacional del Mercado de Valores (CNMV) and the Italian Commissione Nazionale Societa e la Borsa (CONSOB), and more. This allows them to legally accept new investors from the United Kingdom, Germany, Spain, Italy and other European countries.