he Financial Conduct Authority (FCA) has confirmed its ban on binary options trading to retail investors will begin on Tuesday, April 2.
Binary options allow investors to bet on a particular outcome, but if the investor loses the bet, they lose 100 per cent of their money.
For example, a binary option bet on the outcome of a football match might give the home team an 18 per cent chance of victory, yielding an 18 per cent return. But if the outcome is different the investor loses all their money.
The FCA announced the intention to ban the practice in December, and launched a consultation thereafter.
The consultation closed in February and the ban has been confirmed today (March 29).
The regulator stated it believes the sale of such products to retail investors leads to consumer harm.
It expects the ban to save retail consumers £17m a year and to reduce the risk of fraud, as many fraudulent entities have claimed to be offering these products.
Christopher Woolard, executive director of strategy and competition at the FCA, said: "Binary options are gambling products dressed up as financial instruments.
"By confirming our ban today we are ensuring that investors don’t lose money from an inherently flawed product."
Source: https://www.ftadviser.com/investments/2 ... ption-ban/
