From the 1st of July Binary Options will be banned in Europe because of the new ESMA regulation. ESMA (European Securities and Markets Authority Regulation) is located in Paris (France). It is an independent financial regulatory institution of the European Union which focuses on improving investor protection by promoting steady money market.
It looks forward to:
1.) Investor Protection – to examine that the investor’s rights are served properly and they are kept safe from frauds.
2.) Financial Stability – by building up the financial system against financial imbalances so that it can support the growth in the economy.
ESMA regulation serves the motive of protecting the consumer against frauds, illegal activities and too risky products. It benefits the financial service industry, the investors and consumers, the economy, the public, and marketable securities.
The new ESMA Regulation
In January 2018, the authority took action against the fraudsters dealing in the trading market of Binary Options followed by March 2018 when ESMA regulation had to intervene and take a serious action against this, hence Esma banned Binary Options companies to sell to individuals. Thus Binary Options will be banned in Europe with effect from July 2018.
Binary Option is a Financial Trading market where the returns on investments are very high but with a higher risk of losing money. In simple language, it is basically a game of win/lose where chances to make you win may seem 50/50 but in reality, they are less. As most of the Binary Option companies are fraudulent through the new ESMA regulation binary options should be banned.
In binary options, the chances of getting conned are very high, thus one should go for better trading alternatives. Binary Options are not really financial products, rather they are just a game of gambling where you have to bet on a yes or no situation.
There are better options for investments in the financial trading market: FOREX and CFDs.
What are Forex and CFDs?
Forex which stands for Foreign Exchange is a financial market where currencies are traded (bought and sold) worldwide. It is the largest and the most liquid market in the world.
Forex market is anytime better than Binary Options for many people in the following ways:
- You can control the trade time from as long as you want, there is no minimum or maximum time limit.
- You can limit your risk by applying stop-loss orders which will exit you from the market at your predetermined price, i.e you can initially determine the maximum loss you risk to bear.
- Forex is a large liquidity market, cannot be manipulated in the way Binary Option prices can.
CFDs – It stands for Contract For Difference. Here, there is a contract between a broker and a client which mirrors the movement of an asset. In this, you don’t trade an asset, rather you get paid for the difference in the price of cost value and sale value of that asset.
CFDs are better than Binary Options for the following reasons:
- There is a wide access to the Global Markets which helps in trading the commodities like Silver, Gold, and Oil
- You can enter the price movement without depositing a huge fee.
- There is no time limit so you can hold on to your position for as long as you encounter profit.
After comparing Binary Options with FOREX and CFDs, we can easily determine that the later ones are more reliable and safer than the former.
Over the last years, a lot of fake companies have been highlighted which deals in Binary Options and have made a huge profit by fooling the investors.
Thus, Esma regulation is planning towards helping the consumers and investors from the frauds and scams by banning the trading of Binary Options in Europe from July 2018.
The regulation must be renewed every 3 months in order to be kept valid.
If you are looking forward to investing your time and money in a financial trading market, make sure you are fully aware with the present scenario. Rather go for a safer side to start with. Forex and CFDs are good options for you.
To learn more about Forex and CFDs trading please follow this link: https://tradingonlineguide.com/what-is-forex-trading/
ESMA Regulation Renewal
As we have mentioned above, in first place the new ESMA regulation should be renewed every 3 months to stay valid.
From July 2018 there is no news yet about a renewal, which means there could be a small possibility that binary options will be added on the market again in the future.
In our opinion, this shouldn’t be the case. ESMA is working on this project for many years, and now that finally have achieved their goal to ban the product from the market, it won’t be a missed renewal to allow the second introduction.