Is Binary Options Trading Legal in United Kingdom? – Guide for United Kingdom Traders

The United Kingdom has a very critical position in the global finance sector. London is termed to be the world’s biggest hub for financial trading. Moreover, the financial trading prospects within London acts as the connecting bridge for the markets in between Europe and America. 

The time zone of the United Kingdom is positioned in between Tokyo/Sydney and New York. As a result, the traders within the London zone can seek the market movement news across the globe. There is a very progressive jurisdiction in the United Kingdom regarding financial market activities. 

Now, the question is, how do binary options fare in the United Kingdom? It is the question amidst the mind of many traders of the UK, who want to be aware of the regulations and rules before entering the field of binary options trading. 

Therefore, this article is here to help you understand the legalization of Binary Options trading in the United Kingdom and the associated regulations. Along with that, this article will also highlight the best three brokers that offer services for Binary Options trading in the United Kingdom.  

What Are Binary Options?

Before proceeding with the legalization and broker information, you need to understand what binary options are. It is a simple trading format that allows the traders to bet upon ‘yes’ or ‘no’ for an asset’s price movement. 

It means that a trader will bet an amount from their capital by predicting whether the market price of a selected asset will move up or down within a specific period of expiry time. So, it is one of the most accessible forms of trading but comes with a substantial amount of risk. 

Binary Options trading has gained immense popularity in a very short span of time. And it is not about to stop anytime sooner. Most of the countries have imposed regulations on binary options trading. The United Kingdom is not an exception and has set legalizations and regulations to keep track of it. 

Binary options trading is an easy form of earning money but brings in an immense risk with it as well. For instance, if you invest $100 in an ‘up’ movement of an asset with a 70% payout, you will get $100+$70 profit. But if there is a down movement, then you will lose the entire $100. There is nothing in the middle of it! 

Therefore, it is better to learn about the binary options trading format before investing heavy money. And a good broker platform can help you learn and master it before using your real money to trade on financial instruments. 

Are Binary Options Legal in United Kingdom?

Binary Options trading in the United Kingdom is legal and is under regulations by the government. It means that the traders are not punished or penalized for trading the financial instruments over different licensed binary options brokers. However, the condition by the government is that the brokers should offer legitimate binary options trading services without jeopardizing the capital fund of traders. 

Several UK brokers are offering Binary Options trading in the United Kingdom with a license authorized by the government departments to regulate their functionality. Binary options trading in the UK has been in some form of market transition over the ages. Earlier it was not that popular among the people. 

It is because, in the year 2015, Binary Options trading in the United Kingdom was counted as a form of gambling. In the US, online gambling is completely banned by the law! But in the UK, it is on a thriving stage. According to the records, the UK generates around £12.6bn every year within the gambling yield. The UK Gambling Commission gives this report. 

As binary options trading was also accountable to be a form of online gambling in those times, there was no special recognition for it. Earlier, the participants were not aware of where they were investing and the weightage of this trading format. Hence, the UK binary options industry was in disguise!

But soon, the governments of the UK realized that financial trading and gambling could not be put up together. It is because they both are not accountable with the same methods, tools, and techniques. Moreover, financial market trading, such as Binary Options trading in the United Kingdom, demands a high level of sophistication than online gambling. 

The governments realized that the contracts within financial market trading are much more complex to understand and follow. Therefore, binary options trading of the UK was taken back from the UK Gambling Commission. It is because this commission was not aware of what protection does a financial market trading aspect need. 

Moreover, this trading form was handed over to the authorized financial market regulator to implement protection. All these are now changed as legislation is implemented upon binary options trading. And after taking it from the UK Gambling Commission, it was handed over to the UK’s Financial Conduct Authority (FCA). 

How to Trade Binary Options in United Kingdom?

Trading binary options in the United Kingdom is easy and effective. You just need to look for suitable brokers with an immense number of perks and features. You need to consider a few important factors to decide whether the broker is right for your Binary Options trading in the United Kingdom. 

Firstly, you must consider the regulation of the brokers that you have shortlisted. The regulation should be liable under the UK legalizations. It is essential because if the broker platforms are not abiding by the regulations of the Financial Conduct Authority of the UK, they are not permissible to do business with UK citizens. 

Before selecting and finalizing any brokers for binary options trading in the UK, you should read their terms and conditions. It will help you understand any specific set of hidden rules that the broker imposes for your trading aspects. 

Next, you must look for your convenience in terms of payment (deposit and withdrawal). Not all brokers have flexibility in payment options. You need to check up on the availability of payment options to realize if they have the one that meets your convenience. 

The bonus and monetary reward features are considered as well. But the most important thing that you must look for in a broker is trading tools. If you are a beginner, you will need trading tools to decide accurate predictions. It will help you minimize the losses and maximize the profits. 

Hence, after choosing the best broker platform, Binary Options trading in the United Kingdom becomes easy for you. Irrespective of whether you are a beginner, amateur, or professional, trading with binary options is seamless. 

Brokers and Platforms in United Kingdom

To help minimize your search for the best brokers and platforms, here is the list of the three best brokers in the United Kingdom. These brokers have the license to operate with UK citizens for binary options trading. They have all the features, perks, and facilities available for UK traders without any restrictions. 

These three brokers offering binary options trading in the UK need to follow the regulations of FCA. And this is what gives you a surety about their genuineness. In addition, you can invest your capital on these broker platforms, as you know that there is a government body looking after the functionalities of the broker. 

#1 Quotex.io

Quotex.io is a new platform that offers binary options trading on a good scale. It has a license for operating with UK traders and has gained immense popularity in a very short span of time. The maximum payout of Quotex.io for its financial instruments might range up to 100%. 

Quotex.io deals with Commodities, Cryptocurrencies, Forex, and Stocks. You need to make a minimum deposit of £10 to sign-up successfully to the platform. But you can start your trading with just £1! So, if you are a beginner, you can just start small. And eventually, pick up the pace when you gain the confidence to win. 

Quotex.io also has a demo account for beginners to practice their trading skills. Moreover, it will also give you the taste of its live account interface to feel it real. The only thing that won’t be real is the funds you will invest in the demo account! 

Quotex.io offers over 410 options for trading. In addition, it has several trading tools to help traders determine accurate predictions. Quotex.io operates under the license of IFMRRC (International Financial Market Relations Regulation) and is also abided by the regulations stated by FCA in the UK to do business with UK traders. 

#2 IQ Option

IQ Option is yet another tax-free broker offering Binary Options trading in the United Kingdom. They have a maximum payout ranging up to 90%, giving UK traders a good scope for earning profits. Forex trading is available over the platform.

IQ Option is under the regulations of CySEC license and is standing up to the regularity requirements of FCA. Today, millions of traders recognize the potential of the IQ Option. Their license enables them to offer trading services within European Economic Area (EEA). 

With IQ Option, people have to pay only £10 as the sign-up amount and trade with a minimum of £1. Moreover, IQ Option also has a mobile application to help traders get the feasibility of trading. The demo account is for beginners who want to get used to the binary options trading format and the interface of this platform. 

You can either go with the basic account with a minimum deposit of £10. Also, you can opt for the VIP account with a minimum deposit of £3000. The VIP account has accessibility to all features, bonuses, and rewards of the IQ Option platform. 

#3 Pocket Option

Pocket Option is one of the most bonus-rich broker platforms for binary options trading. It is under the regulation of IFMRRC. The minimum deposit needs for the Pocket Option platform is £50, while the minimum trade amount is £1. It is also under the regulation of IFMRRC. It is operating with all the legal rules and regulations for binary options trading in the UK. 

The deposit amount is high for the Pocket Option because it offers a 50% deposit bonus on all deposits above £50. The maximum payout for Pocket Option goes up to 90%, depending upon the financial instrument you invest in. The payout percentage varies depending on the liquidity of assets and market fluctuations. 

Pocket Option allows the traders to choose the expiry time from 60 seconds to up to 4 hours. You can choose a short expiry time to get instantaneous results and profits. Most of the traders prefer this technique to study the immediate market movement to win profits. But some are patient enough to expect a steep movement in the asset price as per prediction in the long run. 

You get a demo account with Pocket Option as well! In fact, you get to use the interface and trade with assets using virtual funds to brush up on your strategies. In addition, you can access the Pocket Option platform over the web, iOS devices, Android devices, and Windows devices. 

Regulations in United Kingdom

FCA imposed specific regulations after the responsibility of binary options trading was handed over to the department. FCA sets up some requirements for the financial market companies that are putting up financial instruments, assets, or products for trading. 

The regulatory requirements within the UK for binary options trading are:

  • There should be a vast amount of suitability checks. This will ensure that the right kind of financial product is being put up over the market platforms for consumers to buy it. 
  • There should be a segregation of traders’ funds from the money of brokers. It means that the brokers should use special bank accounts to store the funds deposited by the UK traders. They should not use traders’ funds for their business operations and should not store both in one account. 
  • FCA imposed a robust process for incorporating dispute resolution. 
  • FCA demanded monthly reports from the brokers trading with UK citizens in order to monitor the flow of orders. 
  • The brokers should also contribute to a special compensation fund. The name of that fund is Financial Services Compensation Scheme. 

All of these regulatory requirements for the brokers are for the sake of consumer protection. In fact, the operational standards for binary options trading in the UK are now high, as FCA took control. As a result, trader protection is on high priority. Also, the brokers are under strict monitoring for meeting all these requirements. 

Education for United Kingdom Traders

If you are a beginner in binary options trading and have no idea of how to start with it, you just need to follow the instructions stated by the broker platform. Choose any one amongst the three. And you will find them all helpful in their own ways to teach you the correct form of binary options trading. 

You must use the demo account option available with all these broker platforms. The demo account will replicate the interface of a live account. Also, it will give you a free experience of Binary Options trading in the United Kingdom. Use the virtual funds, and you will be able to trade with your selected asset and predict your movement. 

Practice your strategies on binary options trading over the demo account. And when you feel like you are ready to put up your real money in a live account, go ahead and invest. Start low, and gradually increase the investment amount. You need to study the price movement of an asset to be confident in investing a big amount. 

Frequently Asked Questions

What Should I Look for When I Choose a Broker for Binary Options Trading in UK?

Experience, legalization, regularization, and bonus perks are essential things to consider when you plan to choose the best broker for Binary Options trading in the United Kingdom. 

Can I Make and Receive Payments On My E-wallets?

Yes, most of the top UK brokers are offering e-wallet payment options. You can make or receive payment with the use of Neteller, Skrill, and even cryptocurrencies. The payment options might vary depending upon different brokers. 

Can A Non-UK Broker Offer Binary Options Trading Services to UK Traders?

Yes! As per the rules of FCA, broker platforms in or outside of the UK must follow the necessary regulations. And they must possess a license that is compliant with respective country and UK standards. With this license, any non-UK broker can do business with UK traders. 

Conclusion

Now, you are aware of the regularization and legalization concepts of binary options trading in the UK. You just need to leverage this profit potential by choosing the right broker. On selecting the best broker, you will be open to impeccable monetary rewards. Some brokers offer high bonuses that deprive you of using your funds for trading. Count on these details, and you will eventually be one of the best binary options traders in the UK.