The UK's Financial Conduct Authority has published a list of 94 firms without FCA authorisation that it believes to be offering binary options trading to consumers.

Since 3rd January, firms involved in binary options trading in the UK have had to register with the FCA. Firms that the FCA has not authorised that continue to process binary options beyond that date are acting in breach of s19 Financial Services and Markets Act 2000, thereby committing a criminal offence.

This list is based upon information that the FCA has received from consumers, firms and its own monitors. Many of these firms claim to be based in the UK but the FCA believes that most of the addresses they provide are false and that the firms are actually based overseas. The FCA is investigating each of them. Genuine binary options firms are listed, as always, on the Financial Services Register.

This latest episode might be related to a recent foray against binary options by the European Union, a body that the FCA admires greatly. Last month the European Securities and Markets Authority voiced its concern about the provision of speculative products such as contracts for differences, rolling spot forex and binary options to retail/HNW customers.

ESMA is thinking of using the 'product intervention' powers that Article 40 MiFIR (the Markets in Financial Instruments Regulation) gives it. It says that it might prohibit the marketing, distribution or sale to retail clients of binary options and restrict the marketing, distribution or sale to retail clients of contracts for differences and rolling spot forex. Slightly confusingly, it refers to the latter as a type of the former. More specifically, it is thinking of consulting interested parties about:

• leverage limits on the opening of a position between 30:1 and 5:1, whose limit might vary according to the volatility of the underlying asset;
• a margin close-out rule;
• negative balance protection to provide a guaranteed limit on client losses;
• a restriction on benefits that 'incentivise' trading; and
• a standardised risk warning.

Any 'product intervention' of ESMA's under Article 40 can last for three months and is renewable.