Is UKOptions a Scam?

UPDATE (12.01.2017):

We have found out that UKOptions is closed.

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Old Review:

UK Options LogoIs UKOptions a scam? This is a reasonable question to ask, as a significant number of binary options brokers have been previously exposed as fraudulent operations. Binary options trading requires the use of an intermediary or broker in order to trade, and as the industry is largely unregulated, traders should be careful of unscrupulous brokerage companies which may do things such as arbitrarily blocking or refusing withdrawal requests or blocking a trader’s deposits and earnings. However, after performing our due diligence by using UKOptions’ platform and services, we have determined that UKOptions is unlikely to be a scam.

Our testing of UKOption’s trading platform indicated that the use of its platform as perfectly safe. Further, its trading platform utilizes the SpotOption software, which is not only highly advanced but also highly trusted as said platform provides the user with detailed information on withdrawals. As such, we have no hesitation in adding UKOptions to our whitelist.

Now you may be asking yourself, what are some surface level methods you can utilize to assess whether or not a binary options broker is likely to be a scam? Well, the first metric you can use is to look at minimum deposit amounts; the industry standard, which UKOptions follows, is $250. As this is a pretty low amount of money, it is unlikely that any fraudulent operation would attempt to scam traders via this method.

Another metric we can use is the reliability and availability of customer service options. Generally speaking, fraudulent brokerages may block or simply not process withdrawal requests, and when the irate trader attempts to contact customer service to resolve the issue, he or she is met only with dead phone lines and unanswered emails, or sometimes there is no contact information even posted on their websites. Using this metric, we see that UKOptions offers numerous customer support channels, with livechat options, email support, and phone support in nine different countries.

The final metric is of course, peer reviews and complaints, with this very website being a good example. Thus far, there have been no serious complaints or fraud accusations leveled against UKOptions. While we found several unverified complaints against UKOptions, we remain skeptical of such anonymous complaints as there is always a good chance that such complaints were posted by its competitors! Unfortunately the unregulated nature of the binary options brokerage market means that such less-than-ethical methods such as fake complaints, while not being fraudulent per se, are highly prevalent. One final note of caution regarding scams: some fraudulent operations are not even unscrupulous brokers, but simply scam websites looking to obtain a person’s financial information; these brokerages do not even exist, but are merely phishing sites.

Binary options trading is attractive to many as it is both profitable and exciting, but its unregulated nature also attracts fraudsters and people looking to take advantage of others. That is why websites such as this exist to help traders make the right choice in choosing a binary options broker. In the age of the Internet, all traders have the responsibility to perform due diligence and research when selecting a broker.

To summarize, UKOptions is a broker that has both high popularity and a good reputation, with no serious accusations of fraudulent activities or complaints so far. It also stands out from the crowd by being one of the few brokers that offer both high quality services as well as an integrated system.

Are There Any UKOptions Complaints?

A major selling point of binary options trading is that it does not really require previous trading experience or specialized and specific market knowledge in order to be successful. As a matter of fact, the selection of the correct brokerage seems to be one of the major factors in a traders success! Again, this is due to the unregulated nature of the market, and many brokerages move the odds in their favor, meaning that even a savvy trader can end up losing money as he is playing a rigged game.

As we mentioned above, we did find several unverified and anonymous complaints against UKOptions, suspiciously, many of those same complainants then went on to tout another binary options broker as an alternative! Slightly suspicious, no? The sad reality of the matter is that many binary options brokers complaints and reviews are posted by affiliate marketers hoping to steer unsuspecting customers to their brokerage of choice. Please note that this does not mean that all reviews and complaints posted by affiliate marketers are illegitimate, in fact, many of them are done with the customer’s best intentions in mind. Nevertheless, this marketing model is something all traders should be aware of when scouring the Internet for reviews and complaints for a particular broker.

UK Options Logo Screenshot 2

Is UKOptions Regulated?

Short answer: no. Like the vast majority of binary options brokers, UKOptions is not regulated by any noted financial authorities. While it is a UK-based company, it is note regulated by the UK’s Financial Conduct Authority, which does not regulate binary options. In fact, binary options in the UK are actually regulated by the UK’s Gambling Commission, but only if the company operates remote gambling equipment within the UK itself.

As it stands today a number of binary options brokers are actually regulated by CySec, which stands for the Cyprus Securities and Exchange Commission. As Cyprus is an EU member state, its financial regulations comply with the EU’s financial harmonization law, known as MiFID, or Markets in Financial Instruments Directive, which allows binary options brokers to offer their services throughout the EU. Note that the reason that many binary options brokers do not accept United States based traders is because unregulated brokers in the US (meaning brokers not regulated by the Commodity Futures Trading Commission) may be subject to heavy fines and curbs on its operations, such as the case with Banc de Binary, which had to pay $11 million to US authorities, and was also fined a further EUR350,000 by CySec.

In 2013, CySec announced a change in its policy and recognized binary options as financial instruments, which would then fall under its regulatory purview. This meant that many brokers previously registered with CySec had to apply for a CIF license. CySec, as seen in the Banc de Binary case above, is also attempting to assert itself as a more stringent regulator, in recent cases it has suspended the licenses of other binary options as well as retail forex brokers.

To summarize, at this point in time, UKOptions is a currently unregulated broker, similar to most binary options brokers. Regulators such as CySec are paying more stringent attention to this industry, and it would be beneficial for UKOptions to follow such a regulatory path to increase its perceived level of trustworthiness and legitimacy. However, it should also be noted that unregulated brokers are generally able to offer traders higher spreads compared to regulated ones although they are no doubt riskier. As with all markets, the rule of higher risk for higher returns still applies.

UKOptions Bonus

Like many brokers, UKOptions also offers traders multiple perks such as bonuses in order to attract customers. Bonuses function as an incentive by the brokerage in order to increase customer trading volume, and are usually awarded after a client’s invested funds reach a certain threshold. Bonuses can be awarded in several forms, such as signing bonuses, deposit matches, gifts, trading credits, or investment matches. Bonuses play an important role for binary options brokers in differentiating themselves from their competitors, and hence the bonus policy of each broker is usually unique, discretionary, and always subject to change.

Currently, UKOptions awards bonuses based on deposit amount tiers, from ‘Beginner’, which has a minimum deposit amount of $1,000 and a maximum bonus of $500, all the way up to ‘VIP’ status, which has a minimum deposit amount of $100,000 and a maximum bonus of $30,000. Another factor that UKOptions uses to incentivize the various tiers are the frequency of trading signals provided, beginning with giving traders signals only once daily (Beginners tiers) up to thrice daily (Professionals & VIP tiers).

While traders are usually elated upon receiving bonuses, caution should be exercised as bonuses usually come with associated withdrawal conditions. It is standard practice for binary options brokers to impose minimum trading volume requirements on accounts that have been credited with a bonus, usually as a multiplier of Total Deposits + Bonus. In UKOptions’ case, the minimum trading volume has been set at 40 times that amount, which based on our research is toward the higher end when compared with other binary options brokers. Further, we should note that UKOptions does not count forex trading volume when calculating the minimum trading volume for bonus-credited accounts.

Let’s look at a simple example to illustrate how a bonus structure works. Let’s say I have an account with UKOptions with a $2,000 deposit amount, and am awarded a $250 bonus as an incentive. My total account balance is now $2,250, being my initial deposit of $2,000 and the $250 bonus. Now, at any time prior to receiving my bonus, I could have withdrew money from my account, however, once I have accepted the bonus, I would only be able to withdraw money from my account after generating a minimum trading volume of 40 x $2,250 = $90,000! That is a lot of money, and now my funds are effectively locked into said account until I fulfill said requirement.

As bonus policies are highly discretionary and come with such imposed conditions, the bonus system may be exploited in order to unscrupulously ‘lock in’ a customer’s funds by preventing withdrawals. In fact, this is a common tactic used by unethical brokers and is one of the most common forms of customer complaints levied against the industry in general. While bonuses are not bad in and of itself and can in fact accelerate a customer’s trading volume ability (and hence potential profits), customers should be wary about bonuses that are credited into their account without acceptance or even being informed, and bonus policies that come with extraordinarily high minimum trading volume multipliers withdrawal conditions.

Other than the trading volume threshold for withdrawals from bonus-credited accounts however, withdrawals from UKOptions is quite straightforward. Minimum withdrawal amounts are $100 and maximum withdrawal amount is $20,000. Withdrawal requests are processed within 3 business days and funds may take an additional 5 to 7 days to reach the customer’s account. No fees for credit card withdrawals and one free wire transfer withdrawal per month ($25 for each subsequent wire transfer withdrawal). One thing we would like to highlight however, is that UKOptions does not process withdrawal requests within the first 30 days of an account being opened, barring what they consider as ‘special requests’. This is a somewhat restrictive condition and all traders should be aware of this condition prior to signing up. In our view, while UKOptions clearly states this condition on their website, this condition nonetheless constitutes a bit of a warning flag to us as it is a clear attempt to restrict customer withdrawals.

UKOptions Demo Account

What is a Demo Account? Well, as the name implies, it is an account that select binary options brokers offer to registered users which allows them to use their trading platform and make ‘real’ trades without risking any real money. This gives the trader some real-world trading experience and familiarity with the broker’s trading platform, which would make said trader a more competent trader when he or she beings actually trading. Demo accounts are also another way that binary options brokers use to differentiate themselves from their competitors and to attract and retain customers.

At this point in time, UKOptions does not offer users the demo account option. This is not unusual, as unlike trading bonuses, the majority of binary options brokers do not offer the demo account options. However, we do not consider this to be a major issue as UKOptions offers various free educational features and resources on its website to educate new traders. On the ‘Academy’ section of their website UKOptions offers useful articles and tutorials, ranging all the way from the beginner ‘Markets 101’ all the way up to ‘Active, Passive, and Aggressive’ trading strategies.

In addition to helpful articles such as those, UKOption also conveniently offers numerous video tutorials and even ebooks for even more in depth information and analysis. It offers ebooks on commodities and futures, CFDS and stocks, social trading, amongst others. They also have webinars related to binary options as well as on how to use their SpotOption trading platform. With such resources provided to their customers, we believe that this more than makes up for the lack of a demo account in terms of providing educational value and experience to their customers.

Other than educational purposes, another reason why some people look for brokers that offer binary options is the reliability factor. Such people may feel that brokers who offer demo accounts are less likely to be scams and are more trustworthy. While this is true to a certain extent and may expose brokers who rig the trading odds in their favor, as we have mentioned previously, a more common way that unscrupulous brokers use to fleece customers would be using various tactics to prevent account withdrawals, such as unnecessary fees, restrictive bonus conditions, rejecting the request for arbitrary reasons, or simply not processing the request. As demo accounts have no real money behind them, a broker offering the demo account option may still use such tactics to scam its customers and demo accounts would not be a good indicator of trustworthiness.

To conclude, based on our testing, UKOptions is highly unlikely to be a scam, as they have managed to obtain decent customer reviews with no serious complaints in their short time in operation (under 3 years). Nevertheless, potential customers should note that it is an unregulated broker, which would limit customer redress options, and should also read all of their associated terms and conditions (such as minimum trading volumes on bonus credited accounts and general withdrawal conditions) carefully prior to making any decision.

References/Further Reading:

  1. REIT Auditor Fees and Financial Market Transparency (David Harrisson)
  3. The Microfinance Schism (Jonathan Morduch)
  4. Reputational Concerns and the Emergence of Oil Sector Transparency as an International Norm (Alexandra Gillias)
  5. The Role of Transparency in Financial Regulation (Christine Kauffmann)
  6. Corporate governance and strategic transparency: East Asia in the international business systems (Tarek Ibrahim)
  7. The Effects of Corporate Governance on Corporate Transparency Experience from China Listed Companies (Cui Xuegang)
  8. Improving Transparency and Relevance of Auditor Communications with Financial Statement Users (Jerry Turner)
  9. The Sarbanes-Oxley Act of 2002 and Capital-Market Behavior (Pankaj Jain)
  10. Central Bank Transparency and the Crowding Out of Private Information (Clemens Kool)
  11. The Quest for Transparency in Financial Reporting (Bert Zarb)
  12. Assessing Quality of Financial Reporting (Gregory Jonas)
  13. Country Transparency and the Global Transmission of Financial Shocks (Luis Marques)
  14. Global financial crisis: The challenge to accounting research (Patricia Arnold)
  15. The Fall of Enron (Paul Healy)
  17. Restoring Financial Stability: How to Repair a Failed System
  18. The role of information and financial reporting in corporate governance and debt contracting (Wayne Guay)
  19. Transparency and accountability of central banks in their role of financial stability supervisor in OECD countries (Jakob Haan)

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