Best Binary Brokers
For many Indians, binary options trading is seen as a godsend, an excellent opportunity to earn a second income or as a way to work from home, especially after the Reserve Bank of India forbade Indian residents from trading forex online. As a result, questions are commonly asked as to whether it is actually legal to trade binary options in India. A seemingly grey area, confusion about the legality of this trading type is rife, and arose largely due to the clampdown by the Reserve Bank of India on online forex trading. However, binary trading in India as with many other countries around the world is not regulated, unlike online forex trading. It is important to note the difference between something that is illegal and something that is unregulated.
So let’s start by taking the time to find out what are the rules and regulations surrounding this trading vehicle. Most binary brokers will accept clients from any country as long as there are no legal restrictions preventing the solicitations of clients in India. The biggest concern is whether the brokerage firm that you plan to sign up with is reliable and trustworthy. This is where we come in. The brokers that we have recommended below for our Indian readers have been reviewed by us and are selected for the following reasons:
- Established and Reputable
- High returns and fast hassle free withdrawals
- Operate under regulatory oversight
- Wide range of instruments to trade with
Best Brokers in India
Indian traders are limited as to the choices of brokers which they can sign up with. This is largely because most of them do not support Bengali or Hindu on their websites making it challenging for those who are not fluent in English to conduct their trading activities. Nevertheless, to help our readers in India to get a head start trading binary options, we have come with a list of brokers which are able to cater to the specific needs of traders in India.
Binary Options Regulations in India
While hotly debated among the Indian online trading community as to whether it is illegal to trade binary options in India, technically speaking the answer is a simple “No”. Unlike forex trading in India which is tightly regulated by the Securities and Exchange Board of India, there are no equivalent legal restrictions imposed on Indians trading binaries. Due to the lack of locally regulated brokerage firms, many traders in India have resorted to dealing with offshore brokers, some of which are regulated and others unregulated.
To have a better understanding of the regulatory issues surrounding online binary trading, let us examine in more detail the financial industry’s regulatory landscape. In India, the main regulatory bodies which are in charge of regulating the financial industry are the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
The Reserve Bank of India
The RBI is India’s Central Bank and plays a vital role in implementing the monetary policies of India. It also acts as a regulator and supervisor of India’s financial industry particularly the banking sectors. Another key function of the RBI is management of exchange control specifically the outflow of Indian rupees out of the country to facilitate trade payments and also to maintain the stability of the forex market in India.
The Securities and Exchange Board of India
Established in 1988, SEBI acts as the regulator for the Indian securities markets. Its principal responsibility has been described as “…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to”. SEBI however plays 3 roles as a regulatory body for the Indian securities market. It acts as a quasi-legislative, quasi-executive and quasi-judicial body. In its role as quasi-legislative, SEBI drafts the regulatory requirements for the industry. In its executive role, SEBI conducts investigations and takes enforcement action. Finally in its judicial capacity, the SEBI makes legal rulings which the industry has to abide by. With all 3 functions rolled into one body, this makes the SEBI an extremely powerful regulatory body.
Forex trading in India is highly restricted due to the fact the RBI is trying to control the outflow of INR in an attempt to reduce the country’s current account deficit. With forex trading, you are essentially dealing with currency pairs. For an Indian trader, this means exchanging the INR for USD or EUR. Hence to stop this outflow of INR out of the country, the RBI ruled that online forex trading may lead to Indian traders violating the Foreign Exchange Management Act (FEMA). The only way which Indian traders can trade forex is when the currency pairs which they trade are paired with the INR.
However, all these rulings do not apply to binary trading in India as the trader is not trading in the currency per se but rather on a derivative. But because of the lack of legal framework to govern binary trading in India, SEBI does not issue any license to any binary brokers nationally. In order to trade binaries in India, a trader must sign up with brokerage firms which are based offshore.
Deposit Methods Available In India
In India because of the restrictions placed on the outflow of the Indian Rupees by the RBI, traders have to specify the reason why they are remitting money out of the country. As such Indian traders are limited to depositing funds using their credit cards or by bank wire transfer.
FAQ
- Is it legal to trade binaries in India?
Technically, it is legal as there is no legal framework to govern this trading type in India.
- Are binaries regulated in India?
No. They are not regulated by any regulatory body in India.
- How to trade binaries in India?
To trade in India, Indian traders have to sign up with an offshore binary options broker. There are no locally based firms in India.
