I got this question the other day from a site visitor: “Are forex binary options legal to trade in the US?” This question has come up repeatedly on this site because of some confusion surrounding the implimentation of the Dodd-Frank Financial Reform Act. As we have previously discussed on this site many binary options contracts relating to the futures markets (including the aforementioned forex binary options as well as commodities options such as gold, silver, and oil) are no longer available to trade in the US at most brokers. After a LOT of searching we have however found one binary options broker that offers trading to US residents with no restrictions. This is not in fact a result in the change in legal status of the contracts themselves – to the retail investor. The problem has lied (and continues to lie) with the lack of clear regulation regarding how brokers can route futures contract orders they use to create the binary options contracts in the first place.
Does This Mean Forex Binary Options Are Expressedly Forbidden in the US?
Absolutely not. What it does mean is that at present no brokers of traditional binary options contracts feel comfortable offering them to clients in the US due to the uncertain regulatory environment. In other words, no one wants to commit to making contracts available using uncertain futures market routing only to find out some time down the road that the routing method they chose has been made illegal. I think once you find the Dodd-Frank rules further set in stone markets for these very popular contracts will free up.
Where US Residents Can Trade Binary Options Unrestricted
After getting a number of requests for information I started really digging around trying to help people find a binary broker who offers unrestricted binary trading for US residents. While the rest of the platforms in the industry are waiting for Dodd-Frank rules to be sorted out they are seriously losing out on marketshare to those willing to work in this (as yet) still unregulated market in the US. While the rules of Dodd-Frank (once completed) may change how trading operates in this industry those platforms who continue to work with US traders in the interim will likely continue to have a lifelong marketshare advantage over those who do not – so long as they quickly come into compliance with any new regulations as they come out. Fortune favors the early birds and the bold I guess.
Other Limited Availability of Forex Binary Options and Commodities
In the meantime it is still possible for US traders to access a limited selection of forex binary options and commodity binary options at one pair options broker – a contract with nearly identical properties to binary options (particularly the forex contracts).