The now-defunct Binary Options trading has been hit with a fine of $200 000 by the Commodity Future Trading Commission over a breach of trading regulations.

Why Binary Option Is Being fined

The Financial market is one of the largest industries with players from different specs of life. There are personal traders, fund managers, and companies in this market, just as there are many brokers that provide platforms for traders to trade forex pairs.

One of the requirements in trading successfully on the financial market is to use a reliable broker. Investors are usually advised to use a broker that is regulated under the Commodity Future Trading Commission, for they will be under the guideline of the United States monitoring body. The CFTC is a regulatory body in the United States set up to monitor the activities of brokers, and safeguard investment. The Commodity Future Trading found the Binary International Company, also known as Binary Option of violating the commission’s rules and regulations for safe trading.

The director of Enforcement James McDonald while commenting on this says,

The requirement that these contracts be offered by registered entities on a bona fide exchange is part of the CFTC’s comprehensive regulatory regime to protect the public from unscrupulous trading outfits.  We remind customers that they should do their homework on any firm they intend to use to trade in our markets.

Following investigations, it was found out that the firm which is an unregistered British Virgin Island Company with base in Cyprus, has been violating the law since 2016. The schemes involved trading binary options on FX pairs on the platform of the company

Since the revelations, following the investigation, the company has seized to operate under the name. The company can no longer operate under the said name “Binary Option” except they seek to register with a different name.

What is the Solution in Dealing with Trading Platforms?

The Commodity Future Trading Commission was set up to monitor activities over these trading platforms so as to ensure that investors funds are safe. They regulate the financial market industry against unscrupulous entities. As such, one of the features investors have to look for is whether the company is registered under CFTC or not.

However, CFTC has warned that registration of the company under the platform is not a guarantee that the company is safe and secured for investors. This is because the job of the CFTC is to regulate with certain guidelines to follow.

So, investors are advised to do their homework and research about any company they choose to operate within the industry. Many of these companies that are operating in the United States are not Registered under the country. They operate from offshore offices and bases. Thus, it is difficult to regulate such companies with no jurisdiction in the United States.

In a nutshell, registration is one of the features to look for in choosing a broker, but it is no guarantee that your investment is safe and secured. It is thus the responsibility of investors to do their personal research on brokers before doing business with any.