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CFTC Binary Options

Gary Gensler - Commodity Futures Trading CommissionBy the way, CFTC stands for the Commodity Futures Trading Commission. If a binary options broker offers commodities as an asset class, that broke will not let US Citizens trade them… unless they’re registered with the CFTC. Their goal is to protect the public from fraud and manipulation.

Now, how have they done over the last couple years? Absolutely Terrible!

Over the last couple years, the commodities industry has been rocked with two large scandals. In 2011, MF Global transferred over $891 million from customer accounts to their broker-dealer account to cover losses they made. Many customers were screwed out of their money. In 2012, PFGBest stole $200 million worth of customer funds. Again, several customers were screwed out of their money.

With that said, it’s pretty ironic that the CFTC is putting so much heat on overseas binary option brokers. They feel that these overseas brokers don’t have the proper compliance in place. In addition, customers are vulnerable to fraudulent acts by these brokers.

Well, I’m all for clean and transparent markets. I don’t think anyone should be cheated. However, if you are a US based customer, and choose to trade with an overseas binary options broker – you should make sure they have a governing body regulating them and ensure they are properly vetted by trading experts. Because they are not complying with US regulatory requirements. Sorry. But that’s the way it is. Many overseas binary option brokers will not allow US citizens to trade through their platform for this reason. That’s Fine. Some of the sales reps are not educated enough on this matter, but now you know.

Incidentally, the one CFTC regulated binary options broker does not allow overseas customers. Nadex, only allows US residents with a permanent US address, who have a US bank account and a valid Social Security or Tax ID number. On the plus side, Nadex contracts replicate actual futures markets.

But how can we trust the CFTC after they have failed so miserably? It was just a couple months ago that JPMorgan had to pay over $100 million to the CFTC over the ‘London Whale.’ As an outside observer, it seems like the CFTC is controlled by the large market players. In other words, if you are an overseas binary options broker they don’t want you to join the club.

Now, don’t get the wrong idea and start thinking this is a conspiracy theory. The facts are the facts. Unfortunately, like many things in this world, politics rule. Should you feel more comfortable trading CFTC binary options vs. unregulated binary options? Think about it.

In conclusion, you should do your own due diligence on selecting a binary options broker. But at the end of the day, there’s always going to be bad apples. That’s why extensively reviews and monitors all the binary brokers to weed out the few borderline fraudulent brokerages so you can trade with the right broker with peace of mind!

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