The first thing that has to be understood about binary options in Hong Kong is the fact that any government agency does not regulate them.
SFC
Regulatory authorities have repeatedly stated that they don’t regulate anything to do with binary options, so traders remain unprotected. This means that if a trader wants to try out this type of trading, they should do so only on the chosen platform.
Trading binary options within Hong Kong borders can land you in jail as well if you are doing it without adhering to specific rules laid down by the Securities & amp; Futures Commission (SFC). The said authority warns people against trying their hand at it for just one reason: there is no protection available for people who want to trade within the country.
Binary Options
A binary option is an investment plan which provides the trader with two possibilities. They can choose to invest in something and get a predefined amount of money back if the chosen product works out fine. Or, they can opt not to do so and get their initial investment back but lose something for it – usually 20%.
These choices are supposed to limit the risk associated with this kind of trading while promising high profits. Since 2010, hundreds of people have suffered heavy losses because they decided to trade in binary options through unregistered brokers operating from abroad.
The truth is that there probably exist numerous online platforms within Hong Kong itself where one can opt for these kinds of trades without any fear of being conned. If there is any such site, it has to be registered with the SFC to be considered genuine and credible. Learn more from Saxo.
Despite the described risks involved when trying out this form of trading within Hong Kong, residents can always choose a platform from outside the country. Many Hong Kong brokers have already taken a step towards going international themselves.
They might not call themselves scam companies anymore, but they don’t make much difference for people who want to trade with them either way because they are unregulated as well.
Traders should know that regulated binary options brokers aren’t allowed to provide their services to Hong Kong traders at all unless they get a license from the financial authority.
What you need to know
One of the things traders need to know about binary options in Hong Kong is that anybody found guilty of engaging in illegal trading can face a fine not exceeding HK$ 500,000 and three years behind bars.
The SFC also warns unregistered brokers operating from abroad against trying their hand at targeting local citizens because they will face criminal charges if caught doing so under the respective jurisdiction’s laws.
It’s no secret that Hong Kong authorities are getting strict regarding criminals who use cyberspace to commit crimes.People who are interested in binary options should know that the SFC issued a warning against investments involving them just last month.
The said authority explains that it made this move because Hong Kong traders have suffered heavy losses at the hands of unregulated brokers operating from abroad. It warns people not to fall prey to any offers promising guaranteed high profits for little amounts invested, as they are almost certainly scams designed to make crooked brokers money.
Traders need to realize that by no means does it mean you can’t trade binary options within Hong Kong borders unless you choose an authorized platform or follow strict rules set out by the SFC.
Hong Kong brokers have already started applying for licenses to target local customers legally in the future.