Binary Options Regulation Imminent in Japan
Japanese authorities have recently announced that they would begin regulating binary options trading most likely during the year. TheFinancial Futures Association of Japan revealed that it would soon devise a set of rules that binary options brokers would have to respect in order to attain licenses in the country.
Due to the extremely rapid growth in the popularity of binary options, the Financial Futures Association of Japan revealed that it would soon create a set of guidelines and rules that binary options brokers will have to follow in order to be allowed to offer their services in the country.
However, experts have noted that while most of these rules make a lot of sense, some of them might negatively impact Japanese traders, forcing them to register at brokers that continue to operate outside of the law without licenses.
One of these rules in question is the requirement for brokers to only offer binary options with expiration times of a minimum of two hours. With this rule, regulators attempt to make binary options trading more serious and professional by forcing brokers to only offer option contracts that offer a more professional trading experience.
However, what regulator would like to see implemented is not necessarily what traders would like to be offered by brokers. When traders decide to purchase binary options contracts with very short expiration times they do so because they are fully aware of the risks they pose.
Regulators’ attempt to forbid the options with short expiration times would only encourage traders to skip the legitimate brokers and keep trading at binary options brokers operating from offshore jurisdictions that will not be required to follow Japan’s new rules.
These brokers however will be able to continue to accept the registration of Japanese traders. Traders will also not be prohibited from registering of brokers like this. As such, in the opinion of experts, Japan’s new regulations might actually be completely useless in case traders will continue to prefer at unlicensed binary options brokers.
The regulation of binary options is a very sensitive topic at this moment. Multiple countries are about to do the same as Japan is doing now and implement rules and guidelines according to which binary option trading will have to be conducted.
The first country to regulate binary options was Cyprus. At this moment a large number of brokers are licensed and regulated there. Another country that intends to regulate binary options is Malta. Besides these countries such as Italy and the United Kingdom also regulate options trading.
And when it comes to the regulation of binary options there is also the question of the United States. Right now binary options are legal in the US, however the laws were created in the way to hinder the access of foreign companies into the US options trading market.
Despite all the clumsy attempts of authorities to regulate binary options, experts believe that this practice would nevertheless become extremely popular in the future. It’s estimated that by the end of 2013 the global binary options market will be about 4x larger than during the beginning of the year.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.