Binary Options trading is one of the most interesting options trading systems in the world. Under the federal securities laws, in order for a binary firm to be valid and legally offer trading services, it news to be registered with the SEC. For example, if the binary options contract is offered as a security, it is not offered or sold without security. Exceptions do exist sometimes. When the options firm is not registered, the sale of the binary options or offering trading services would be deemed illegal. When any binary option are offered as security-based swaps, then there might be additional requirements.
Sometimes, it is seen that binary options trading firms often operate without any valid form of registration. If the firm decides to offer one among the investors worldwide or a particular country, it is extremely important that they first register it with the SEC as a broker-dealer. When the options firm allows buying or selling securities or allows receiving of transaction-based compensation and commissions, it is mandatory for it to be registered with the SEC. You can always check the FINRA BrokerCheck platform to find out whether the firm is registered with the SEC.
Certain platforms operate as an unregistered security exchange. In such cases, they match orders in securities of multiple buyers and sellers using non-discretionary methods. However, there are cases where the broker in spite of being registered with a trading system have no license to register as an exchange. You should, thus keep checking all the broker platforms before investing anything significant with them.
The lack of compliance with the laws has definitely jeopardized the trading mechanism of many scammers. If a trader purchases any options offered by the firms which are not licensed by the financial regulatory authorities, they might not have the full benefit of the safeguard mechanisms being offered by the SEC. They might end up losing their money permanently and would not have a method or way to retrieve it back. Hence it is always suggested to trade with only legitimate brokers who hold a valid license.
Till then, stay safe with your money and invest wisely.