I was working on a binary options broker review the other day, and had the rare opportunity to talk to a knowledgeable customer service agent. I have written dozens of reviews, and only a handful of times have I ever actually been able to talk to a human being while using live chat. The agent I was speaking with worked for Global Trader 365. We have yet to draw a firm conclusion on this broker, but we are looking into what they have to offer since the customer service was great. I did want to share some of the insights I was given since the conversation shed some light on what is, to many people, a confusing industry.
In almost every review you’ll read for any binary options website (whether here or anywhere else on the web), you’ll usually see a listing for whether the broker is regulated or not. The vast majority of time, you’ll find brokers listed as “not regulated,” but occasionally you’ll see one which is listed as regulated. When I asked if Global Trader 365 was regulated, here was the response I received:
“We are not currently regulated, nor is any other binary option broker, except for Nadex. There are no exchange commissions that are currently offering regulatory approval. There are a couple countries that are beginning to lay groundwork.”
Wow, was that surprising or what? So my next question was, “What about sites that tell me they are regulated and even give me a license number? Usually it’s a CySEC or BVI FSC registration.”
The response was that some binary options brokers are regulated, just not as binary options brokers. A number of regulated Forex brokers also operate binary options websites. Since they are regulated under laws concerning FX brokers, they are regulated in a general sense. While this didn’t enter in the discussion, I have also found a few other brokers which are regulated by gambling commissions (like MarketsWorld) or private banks. So that is something to keep in mind if you are researching brokers and are confused about regulatory issues.
You also may find brokers which are seeking regulation as binary options brokers through CySEC or another authority which is laying groundwork. Since the groundwork is not yet complete, they will have to wait until it is to have that regulation. Actively seeking regulation is still a good sign that a broker is doing its best to be accountable, as is accepting regulation under other financial laws (i.e. those governing private banks).
Why All Binary Options Sites Look Identical
Another thing I wanted to understand was why almost all binary options websites look nearly identical—not to mention why so many of them mention being operated by a single company. I cannot tell you how many websites I have found that would appear to be operated by a company called ChargeXP. Third-party reviews for many of these sites state that this company owns them all. Naturally my impression, like theirs, was that this was the reason for the similarity between so many of them.
If you are confused about the many company names which you find listed on any one website, this should help you to untangle things. ChargeXP is a billing company that operates financial transactions. They are a contractor used by many different binary options websites, but do not in themselves own these websites. When we find them listed as site operators, this is probably a result of a translation problem when the website is based in a country other than the US or UK.
Another company name you will find on many binary options websites is SpotOption. Most sites list this correctly as the creator of their trading platform software. We have seen a few however which list them as an owner or operator when in fact they are not. SpotOption did however create most of the binary options websites which are out there, before selling those sites to other companies. This is why almost all binary options websites look identical on the surface, and why many of them share the same text in their About sections and other site sections. They are currently in the process of being re-branded by their actual brokers.
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Time Will Provide Clear Reputations
The majority of the binary options brokers on the web are just a year or two old. Most opened their doors to customers in 2010 or 2011. There are a couple of major changes that we will likely see as time progresses.
- CySEC and other financial authorities working on laying the groundwork for binary options regulation will complete their task. At this point, companies will be able to apply for regulation under those specific laws, and not just under other financial laws. This should make the entire industry more transparent and will help us to identify more good and bad brokers.
- Binary options brokers that are operating as SpotOption white label brands will have more time to develop their own brand identities. We should start seeing more individuality and uniqueness in site design, site text, and even trading features. This will lead to more freedom of choice for traders, and will also make the industry less confusing on the whole. It will be easier to figure out at a glance what company you are dealing with.
In the meantime, we suggest you check out some of our preferred brokers. We have been scouting around for good brokers in this era of poor regulation so that you don’t have to do as much work to find them yourself. These include TradeRush, 24Option, Banc De Binary, MarketsWorld, StockPair, and AnyOption. These brokers have passed our tests as far as features, transparency, customer service, and other criteria. As we find more good brokers, we will continue adding them to the list in the future.