Binary options have in 2014 entered the mainstream. Like predicted during the past few years by many experts, binary options trading finally became a mainstream online trading activity.
But what will happen in the future? How will the industry develop during the coming months and years? – Will more regulatory agencies catch up on binary options and finally decide to legalize it or will they instead clamp down on this form of online trading?
One of the most important changes that are expected to take place in the near future is the regulation of binary options in various jurisdictions. Around a year ago binary options were completely unregulated. At that time, no country on the planet had any clear rules on whether binary options are legal or not.
The above quickly changed in late 2013 and early 2014 when several European countries decided to regulate binary options. The first was the European Union member state of Cyprus. The Cyprus Securities and Exchange Commission was the first European Union body to award binary options licenses.
Other countries followed this as well, such as Malta, the United Kingdom, Italy and Germany. The good thing about the European Union is that member states are cross-accepting their licenses, meaning that if a broker is licensed in the United Kingdom it may also operate in Spain as well (unless, for example, Spain explicitly bans binary options – which it isn’t, by the way).
In the future it’s expected that more European countries will regulate binary options. This will result in smalltime and fraudulent binary options brokers going bankrupt, as traders will learn that they should only sign up and deposit at brokers licensed by their governments.
In the United States, however, it’s expected that regulatory agencies would clamp down on offshore binary options brokers. Due to the extremely complicated nature of US binary options laws, these brokers will most likely not be able to apply for US licenses.
Some sources claim that certain European brokers are at this moment talking with US regulators regarding potential licensing. This, however, might take an extremely long time to materialize. It’s expected that in the future US binary options traders will lose many opportunities, as the European brokers will continue to pull out and leave.
Changes Related to How Brokers Operate
Due to the fact that brokers are becoming regulated in Europe, they will have to implement better and fairer services and products. Right at this moment binary options brokers make money by offering relatively low payout rates. In the future they might be required to offer higher payout rates to provide better winning chances to traders.
Another significant development that is already taking place is the implementation of binary options contracts with long expiration times. In the past, brokers only focused on options with short expiration times, because this significantly lowered traders’ winning chances.
Many (mostly European) brokers have already implemented options with expiration times up to several days and even weeks. These new options offer traders very high winning opportunities, as predicting the future movement of assets becomes more accurate as the time frame during which this has to be achieved is longer.
Growth of the Business
In Europe, the binary options market is going to continue to grow massively, especially when additional European countries decide to legalize and regulate binary options. Most of the large European brokers have even announced recently that they intend to go public buy launching IPOs.
In the US however the industry is expected to decline in the short term due to increased regulatory pressure. In the long term this might however change in case US regulators finally decide to award additional binary options licenses. This however is a process that might take several years.
Binary options are also continuing to grow in other parts of the world such as Asia. In Asia binary options are extremely popular in Japan. Japan is yet another country that has in the recent past legalized binary options and is providing licenses to legit brokers.
So, in short, the binary options business is here to stay and will continue to grow in the future. The best part is that it’s starting to become regulated in various places around the world, which will result in safer services and will ensure that traders have the power to distinguish brokers that are legit from frauds.
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