Regulatory framework for Binary Options is quite a complicated matter. In many parts of the world, Binary Options are still largely unknown; but with its rapid development, some countries have started to glance at it.

Regulatory framework for Binary Options, a derivative of forex and CFD trading, is quite a complicated matter. In many parts of the world, Binary Options are still largely unknown; but along with its rapid development, some countries have started to glance at it. It is considered as either illegal by some, or contrarily, licensed as an investment endeavor.

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The United Kingdom have long ruled Binary Options as a form of betting, thus placed Binary Options under UK Gambling Commission instead of Financial Conduct Authority (FCA). However, it will be inconsistent with the approach taken by the European Union and will present an obstacle in whether later Binary Options license can be passported into other countries in the EU. EU's Markets in Financial Instruments Directive (MiFID) has made it possible for any forex broker that has received license in one of the EU's countries to operate in all of EU. UK is currently not yet connected with the network, but if in the future it does, then there will be significant challenge.

Hence, according to ForexMagnates Her Majesty's Treasury recently published a draft legislation consultation paper that aims to shift Binary Options' regulatory framework from gambling to financial trading. According to the news, binary options that relate to specific underlyings may be able to be viewed as MiFID financial instruments. That is, so long as it is related to a specific financial instrument. However, when it relates to something like the weather, then it might not be categorized within. As a consequence of this proposal, UK Gambling Commission mentioned that UK-based binary options this year need not apply for licence until further notice.