Due to the increasing popularity of binary options trading, regulators have been forced to coerce this wing of the financial market under the regulatory covers. One of the latest countries to regulate this market is Japan. We have recently seen the Financial Futures Association of Japan (FFAJ) put up a detailed regulation to oversee the binary options platforms.
In this light, we are seeing binary options broker who are going ahead to alter some things, as well as incorporate new features to comply with these regulations. Here are a couple of the most essential features of the Financial Futures Association of Japan (FFAJ) regulation.
1. In view of this new regulation, the Japanese binary options broker is required to put in place a based hour for its trading session. The regulations requires that the broker ensures that the binary options transactions with individual customers shouldn’t be shorter than the hour base.
2. Binary options brokers across the globe are faced with similar worries, one of which is how these brokers are able to set up prices and what they intend doing in case of a complain. The Financial Futures Association of Japan (FFAJ) has directed the binary options brokers to hold steady the OTC model. It is therefore the responsibility of the provider to make the transaction more open and offer the clients a level playing field where they can trade until their trade expires in the market.
3. The Financial Futures Association of Japan (FFAJ) has noted that offering gifts and cash bonuses like commissions on binary options transactions can alter the trader’s decisions. The Financial Futures Association of Japan (FFAJ) does not see this as a fair way to lure customers (it rather supports affiliate ads). What does this imply? It means that binary options brokers licensed in Japan will have to desist from such gifts and incentives.
4. There’s also a clause on binary options brokers signing up just any client. They are required to verify that such clients are suitable for binary options trading. The Financial Futures Association of Japan (FFAJ) requires brokers to list out the clients attributes, under what criteria a beginner can start trading and the broker will have to place a lid on every financial instrument it issues out.
As part of this, the binary option broker is required to carry a test on their new clients. The test difficulty level should reflect the customer’s grasp of binary options trading. Traders who perform poorly should be prevented from placing trades.
5. In a bid to meet with these new standards, binary options platforms are required to display changes in option values by those in trade price. The Financial Futures Association of Japan (FFAJ) has banned the system in which change in value by payout sum alone is being displayed.
These new regulations are said to apply only to OTC binary options, not on-exchange binary options. The reason for this is as a result of binary option never taking place at a Japanese exchange. These regulations have been tailored to oversee the binary options market. The regulators are continuing to bring more regulations to make the binary options market more legitimate as it keeps growing.
Japanese Binary Trading Rules
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