The regulatory framework of binary options presents significant differences and variations amongst different jurisdictions, even between countries belonging to the EU. One such example is the UK where, as things stand today, binary options are considered as coming under the scope of the 2005 Gambling Act, and thus come under the jurisdiction of the Gambling, Licensing and Lottery Commission, of the Department for Culture, Media and Sport. The good news is that the UK authorities appear to have decided to change the status quo and move towards coming in line with standard European standards with respect to the regulation of binary options.
As revealed by a letter sent out by the Head of Gambling, Licensing and Lottery in the UK in order for the interested stakeholders to be informed, the UK government intends to launch a consultation, which will be published in January 2015, with the aim of regulating binary options as financial products, thus revising its current stance on the matter. Since binary options will no longer be regarded as a form of gambling they will then be put under the supervision of the UK’s Financial Conduct Authority (FCA).
Since financial matters are not a devolved issue, then any changes that might come into effect in this regard will be applied consistently in all parts of the United Kingdom. The letter reveals that UK authorities are now convinced that binary options are “a form of fixed-odds bets on financial markets” and not gambling transactions. It therefore made its intention to revise the legal framework public so that the interested stakeholders will know that their operations will not be affected by the imminent enactment of the Gambling (Licensing and Advertising) Act of 2014 and in order to clarify to providers of binary options services in the UK that they will not be required to hold nor apply for a UK Gambling Commission operating license until further notice, effectively sparing them the cost of fees and the effort of filling in paperwork that they will not need.
This news comes as further confirmation that the online retail binary options industry has come a long way since the publication of the now infamous Forbes article on its operation, as is making strides in being consolidated both in the eyes of investors, government and regulatory authorities as well as the general public, as being an accepted, respectable, mainstream, form of financial instrument and not mere gambling with all the negative connotations that such a label carries.
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.