Binary options

The sale and marketing of binary options is banned in the UK. Find out how they work and why we have concerns about them.

Binary options are a form of fixed-odds betting, which is now banned in the UK.

Typically, a trade involves predicting whether an event will happen or not (for example, whether the price of a particular share or asset will go up). The outcome will either be ‘yes’ or ‘no’.

If the investor is correct, they will ‘win’ and should see a return on their investment. If they are wrong, they will lose their full investment.

In April 2019, the sale, marketing and distribution of binary options by firms to retail consumers was banned in the UK.

Now, if you’re approached by a firm claiming to offer binary options products, it’s probably a scam.

Concerns about binary options trading

Binary options consumers typically lose money, and these losses can be significant.

A key risk of the product is the fact that they are typically priced in a similar manner to fixed odds bets, since their value is determined by the probability of an event happening. 

Investors are offered higher returns for lower probability events and lower returns for higher probability events. 

For investors to make a profit from trading they need to ‘beat the odds’ on a regular basis, which most investors do not.

This feature, along with the short duration of trades, can cause addictive behaviour similar to gambling

Binary options banned in the UK

On 2 April 2019, we banned firms from selling binary options in the UK. 

This followed the European Securities and Markets Authority’s (ESMA) temporary ban on the sale of binary options to retail consumers across the EU, including the UK, on 2 July 2018. 

Our ban includes certain binary options that were excluded from ESMA’s ban.

Binary options bought before the ban

Before 3 January 2018, binary options were regulated by the UK’s Gambling Commission.

If you want to make a complaint against a binary option firm about a bet made before 3 January 2018, you should register your complaint with the dispute resolution body of the firm.

For more information, visit the Gambling Commission's website.

Binary option scams

As the sale of binary options is now banned, any firm offering binary options services is probably unauthorised or a scam.

These scams often promise higher than average returns for bets that never occur, and manipulate software to distort prices and payouts. They also commonly refuse to return clients’ funds and break all contact with customers.

Fraudsters often advertise on social media – the advertisements link to websites that are well-designed and professional looking.

Remember, you should only deal with financial services firms that are authorised by us. You can find out if a firm is authorised by checking the Financial Services Register.

For more information on these types of scams, see our ScamSmart pages.