With the Frank-Dodd Act implemented, many US citizens are still confused as to whether it is still legal to trade in binary options. Binary options being one of the most favorite trading instruments, the traders took quite a hit when the act was enforced. However, the current situation looks rather unpleasant because most brokers seem to not pay any heed to the new regulations and continue to trade in binary options. The following points would apprise you of the situation currently –
- Effect Of Frank-Dodd– Basically, what Frank-Dodd act has enforced is that US citizens are not allowed to trade in binary options anymore. Also, other related options like gold options aren’t allowed either. They have put other restrictions as well but understandably, binary options have been hit the hardest.The main reason for this is that binary options are an extremely popular instrument, especially for day traders like scalpers. They are the people who keep the market moving by creating fluctuations in the trading arena. Without them, the market is not only hit but day trading has also suffered a lot. The direct result of this is that brokers have blatantly ignored the act. This is, however, a bad practice because it would lead to bigger problems later when the government tracks down the delinquent brokers and holds back affiliate commissions.
- Legal Trading Options In The US – There are still some things that have been left untouched by Frank-Dodd like binary options commodities and stock indexes to name a few. Frank-Dodd also covers forex trading which US residents are not allowed to engage in. Securities that are regulated by NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission) are legal and the rest is disallowed.
- Beware Of Fraudulent Brokers – As mentioned earlier, brokers are not adhering to the act. You must beware of such options brokers and always read customer reviews before you start trading. Ensure that the reviews are from people who are from your country. It would also be prudent to make use of the new weeding system installed by many brokers wherein IDs are scanned as per IP and US residents aren’t allowed to sign up.
The market has no doubt taken a hit but instead of working against the law, brokers could exploit other innovative markets like the Japanese and the French market. Breaking the law would simply create more problems in the future and would solve nothing. To stay updated with the news related to the binary trading market, you should visit this website.