he recent popularity of binary option trading has seen many unaware Indonesians lose significant amounts of money and led to blurring of the line between investing and gambling.
Professional traders warn that similar confusion can also happen with legal financial instruments as novel money-making propositions beckon a growing number of retail investors in the country.
A binary option requires the user to make a guess on the price of an asset – be it a stock, a cryptocurrency, commodity or foreign exchange rate – and put their money on it.
The Financial Services Authority (OJK) has declared binary option trading illegal and the Commodity Futures Trading Regulatory Agency (Bappebti) has begun to crack down on the practice.
Bappebti has warned investors they could lose their money on such instruments as there is no formal resolution mechanism. In a press release from Feb. 2, Bappebti acting head Indrasari Wisnu Wardhana called binary option trading "a gambling scheme disguised as investment."
Last year, Bappebti banned 92 web domains selling binary options, including the infamous Binomo hyped up by online influencers. During the same period, the agency blocked 1,222 sites or platforms falling under the commodity futures trading category.
Verifying the legality of a product or platform could help investors avoid dangerous or fraudulent options, but that may not be enough to avoid crossing the fuzzy line into the territory of gambling.
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