Binary Options trading is a straightforward way to trade price fluctuations in multiple underlying financial assets. The underlying asset can be a currency pair (i.e. EUR/USD, GBP/USD, etc.), commodities (i.e. gold, oil, etc.), equity indices (i.e. Down Jones Industrial Index), stocks, a.o.

The binary options trading industry is quite attractive to traders since the trades are fast and straightforward. In addition to this, mobile apps enable traders to trade anytime and anywhere regardless of geographical location and time zone.

It should be underlined that Binary Options trading is a relatively new speculative instrument, so in many countries is not defined by law. However, there are some regulating bodies which may assist traders to choose the right broker and ensure their protection. Therefore, traders are more likely to choose a broker who has obtained a license from a reputable jurisdiction. Cyprus and Vanuatu are among the most popular jurisdictions worldwide.

CYPRUS:

Cyprus is an important international financial and investment centre. Furthermore, Cyprus is a Member State of the EU since May 2004. Hence, there is a requirement for an effective and efficient regulatory framework for securities market.

The Cyprus Securities and Exchange Commission (CySEC) is an independent public supervisory authority that regulates and supervise any investment activity carried out in Cyprus, as well as, the operation of investment firms on the island in accordance with the law that regulates the provision of investment services, the exercise of investment activities, the operation of regulated markets and other related matters (144(I)/2007).

In addition, CySEC is responsible for granting licenses to investment firms. Among the primary objectives of CySEC are to protect investors and contribute to the development of a safe and reliable securities market.

The minimum capital requirements depend on the services provided by the investment firm.

SERVICES Minimum Capital Requirements
The investment firm keeps clients' money and/or clients' financial instruments and provides:
  • Receipt and transmission of orders concerning financial instruments.
  • Execution of orders on behalf of clients.
  • Portfolio management.
  • Provision of investment advice.
 €730.000
The investment firm provides brokerage services and safeguards clients' funds. €125.000
The investment firm provides brokerage services, portfolio management services and holds clients' funds. €125.000
The investment firm is not authorised to hold client money or securities, to deal for its own account, or to underwrite issues or on a firm commitment basis. €50.000

Pursuant to Section 21 of Law 144(I)/2007, the minimum initial capital must be deposited in an account of the Applicant with a bank based in a Member State of the European Economic Area and be blocked until the license is granted.

CySEC must within six months following the submission of a duly completed application package to take a decision and inform the Applicant accordingly.

Find the general requirements here.

Binary Options Regulation in Vanuatu:

Vanuatu (formerly known as the New Hebrides Islands) is located in the South Pacific Ocean. The official languages of Vanuatu are English, French and Bislama, and the official currency of the country is the Vanuatu Vatu (VUV)1. Recently, Vanuatu has been developed into an attractive jurisdiction for financial and investment services. The regulating and supervising body for all financial licenses, including Binary Options licenses, is the Vanuatu Financial Services Commission (VFSC).

Among the main advantages of Vanuatu are the low capital requirements ($2000) and the fast registration. Given that all the requirements are met, a license can be granted within 3 months.

General Requirements and Necessary Documentation:

  • Registration of a Vanuatu company. Our legal team may help you to incorporate a company in Vanuatu. Note that directors and shareholders must be approved by the VFSC;
  • The Company must be registered with the Financial Intelligence Unit, the authority that ensures compliance with Anti-Money Laundering regulations;
  • Certificate of no criminal record for all Directors, Officers, Shareholders and Beneficial Owners;
  • Declaration of no history of Bankruptcy for all Directors, Officers, Shareholders and Beneficial Owners;
  • Duly certified copies of passports for all Directors, Officers, Shareholders and Beneficial Owners;
  • Bank references for all Directors, Officers, Shareholders and Beneficial Owners;
  • Duly certified copies of recent utility bills for all Directors, Officers, Shareholders and Beneficial Owners;
  • A CV of each Director, Officer, Shareholder and Beneficial Owner outlining their experience in securities market;
  • Any other document that may be requested by the VFSC;

Footnote

1. 1 EUR =117.824VUV

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.