THE finance watchdog has named almost 100 firms offering trading in binary options in the UK as doing so illegally — in its first move against the sector since it assumed responsibility for policing the practice earlier this month.

According to the Financial Conduct Authority, the 94 firms on its list — some of which are said to have offices in Edinburgh, Glasgow and London, as well as other UK cities — are understood to be offering binary options to UK customers without its authorisation.

Firms involved in such trading have been required to be authorised from January 3, and those who continue to act without it will, says the FCA, be acting in breach of section 19 of the Financial Services and Markets Act 2000, which is a criminal offence.

While many of the firms appear to be based in the UK, others claim to be based in countries such as Bulgaria, Germany, or the Netherlands.

Locations known as tax havens, such as St Vincent and the Grenadines, the Marshall Islands, Cyprus and the Seychelles, also appear frequently.

The list is based on information that the FCA has received from consumers, partner agencies and from monitoring the binary options market, and it believes that most of the UK addresses are false.

Binary options are basically a form of gambling, where a consumer can make a bet on the expected value or price of a stock, commodity, currency, index, or almost anything that is capable of being measured in financial terms.

A typical bet for retail clients is that the price of a particular asset will be above or below a specified price at specified time, although firms allow clients to bet on a wide range of outcomes.

For example, you could bet at noon, that the stock for a company will either increase or decrease in price by 2pm.

If you get it wrong, you lose all of your stake, but guess correctly and you can “win” a fixed amount of money.

The time periods are typically very short, between 30 seconds and five minutes, but some firms offer longer periods.

Now the FCA is examining all the firms to determine if any are actually operating from within the UK.

If so, the watchdog said will consider taking enforcement action through the courts to stop their illegal activity.

Binary option consumers frequently lose money, and their losses can be significant.

Consumers who trade with an unauthorised binary options firm will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme should things go wrong.

Firms that are authorised to offer binary options to UK consumers are listed on the FCA’s register.

The National tried contacting several of the firms claiming to have offices in Glasgow and Edinburgh, all of which had London contact numbers, although some of the calls were obviously redirected overseas.

A call to TorOption, said to be in Glasgow, was picked up by an answering machine.

A male recording said: “You have reached TorOption. All of our support is … at the moment but we would like to return your call as soon as possible. Please send you request to contact us or send an email…”

At Crown Finance, allegedly in Edinburgh, the woman who answered our call was less than willing to discuss where they were based, or whether they were aware that they could be acting illegally.

“We are an international bank and you can see all the information on how we can work without authorisation and without any documents on our official website.

“If you want any information you can send us an email.”

We sent a number of emails to different companies — none replied, and others bounced back.