Should I Trade Binary Options Through Banks?

Binary options have surfaced as a widely popular financial instrument recently and became one of banks’ latest markets they entered. Investors tend to trust big banks as they are believed to be experts in everything related to investments and trade different financial markets. In this article we’ll discuss if it’s rational to trade binary options through banks rather than regular brokers.

There are no laws that would regulate binary options trading in Russia. Therefore, banks don’t want to openly offer binary options trading. Their doubts are understandable as lack of legislation is a serious problem. But despite all that uncertainty, binary options market is growing rapidly and is too attractive to just stand aside.

Today only few banks offer Forex trading in Russia, and one of them is Nefteprombank. Banks are reluctant to start providing even Forex trading services despite the fact that this type of business has existed for quite a long time. That’s why we can say that Nefteprombank acted unusually for a regular financial institution.

Banks in Russia are even more careful with binary options. This market is still too young for them. But binary options industry keeps growing and getting popularity. If banks don’t do anything, they risk missing great opportunities. That’s why some banks do enter this market despite regulatory uncertainty.

Saxo Bank in Russia has entered the industry and tries to compete with existing binary options brokers. But it offers much less attractive trading conditions. General public won’t be interested in their offers, and that’s for sure. Their minimum deposit requirement is $10,000 and there’s only one type of options available – Touch/No Touch.

Meanwhile, Dukascopy Bank has found another solution. They’ve created a subsidiary which is a binary options broker. Through its subsidiary, Dukascopy Bank is free to explore this new type of business. But traders should know that the bank and the broker in this case are two separate companies which are registered in different countries. So, basically, you trade not through the bank, but through the broker.

How to Choose Broker/Bank to Trade Binary Options?

Regardless of whether you prefer banks or brokers, you need to consider several important things when selecting a company to register trading account. Reliability should be your major concern. If you filter out unreliable options, you avoid a lot of potential problems. First of all, check reputation of a company. Recommendations of one person aren’t enough to make decision more information should be found because investing money is a serious business.

Binary options aren’t officially recognized as a type of financial instruments in Russia, and there are no agencies regulating this market. Therefore traders rely on foreign regulators to make sure their rights are protected.

Traders’ Rights Protection When Trading Through Banks

Even when a bank, which is located in Russia, advertises binary options trading as its own service, formally it isn’t so. As we mentioned earlier, it just tries to promote services of its subsidiary to attract public attention and make potential customers trust this subsidiary. You won’t trade through a bank. It will be a regular broker which is founded by a bank.

To allow banks to work with binary options directly and not through their subsidiaries, new laws must be introduced. Russian government should present regulations which would guarantee protection of traders’ interests, and would specify companies’ rights and responsibilities. Until this job is done the situation won’t change. Many people will think they are registered with a famous bank, when in fact they are customers of another company.

Absence of rules which would regulate binary options market doesn’t allow this industry to reach its full potential. But today there’re no indications of any changes. Everyone interested in binary options trading in Russia just have to wait.

Who Regulates Binary Options Brokers?

Legitimate binary options brokers are regulated by various agencies. In Russia it’s The National Association of Forex Dealers (NAFD), formerly called CRFIN. This organization tries to encourage brokers to join and follow their standards. Outside Russia brokers acquire CySEC, NFA and other licenses.

Big binary options brokers try to maintain their good reputation and therefore never cheat their customers. If there are any disputes with traders, they usually settle them without going to regulators. You can always contact customer support or your account manager if you aren’t happy with something or need help. Famous binary options brokers, which target international audience, usually offer website and customer support in different languages. So there shouldn’t be any misunderstandings.

Brokers are Better than Banks

At this moment brokers created by banks don’t offer attractive trading conditions or other significant benefits. That’s why there’s no reason to use their services. Regular brokers provide much better conditions for binary options investors. They specialize on this market and deliver high quality services which aren’t any worse than those offered by banks. One of such brokers is InstaForex. It’s a reliable and respected Russian company.

To register trading accounts with bank subsidiaries, you need to invest huge amount of money and won’t receive nice package of benefits. Depositing the same amount at other brokers would give you much better opportunities to earn more.

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