The Dodd-Frank bill has had some impact on binary options trading for US residents. One of the principal bottlenecks of the legislation has been the narrowing of eligible brokers for particular futures and commodities transactions. While the hurdles to make option contracts available to traders are not insurmountable some brokerages won't be able to offer their full suite of products to investors until regulations are finalized.
Commodities Binary Options Trading Not Broadly Available to US Residents
The runup of commodities prices has in many cases been stoked by the popularity of short-term trades. This largely unregulated industry has in some cases been muzzled by Dodd-Frank legislation restrictions on how trades can be fulfilled. Regulations still need to be passed in order to clarify / define what types of transactions made be made by what types of market participants. While a few existing market arrangements have enabled some existing firms to continue to offer commodity contracts, others have had to halt their offerings to US residents, in some cases hurting US investors.
Currency Option Contracts in Some Cases Restricted
Similar restrictions in trade order flow have fallen on currency option contracts as well, much for the same reasons. Dealers who were not using a particular method of transaction routing have been closed off from the very popular currency binary options trading market. Mercifully some traders have been able to adjust their accounts to either move to different brokers or change the assets traded to use more vanilla stock and index binary options trading instead. Impacted brokerages have indicated no drop in overall trade volume on their platforms however it stands to reason the longer assets remain unavailable the more clients will ultimately defect for less-restricted firms.
Regulatory Review and Regulations Needed for Clarity
Those dealers left out in the cold and unable to offer a full product offering are awaiting further clarity from US regulating agencies as they attempt to enact rules in the spirit of the Dodd-Frank legislation. Once more specific rules are in place the playing field will hopefully level out for brokerages currently excluded from US markets in commodities and currency option contracts. As it stands right now very few companies are offering binary options trading on these specialty assets - which ultimately hurts (by reduced competition) the very investors that Dodd-Frank legislation was designed to protect. It remains to be seen how long it will take for regulators to complete their review and pass rulings. While all US investors wait traders overseas will continue to have better access to these popular international markets and assets.