Binary options will soon not be an option at all, after the Israeli Cabinet and Knesset’s Ministerial Legislative Committee both voted to ban the industry for customers outside Israel.
The decision comes a year after the Israel Securities Authority outlawed trading in binary options for Israeli customers, but left it legal to market abroad. Now that will be eliminated as well, pending final approval by the full Knesset, which is expected, with no significant opposition in sight.
The bill will make trading in binary options by Israeli firms, with customers in Israel or overseas, a predicate offense under the Prohibition of Money Laundering Law, due to the “criminal characteristics likely to accompany this industry,” as stated in the explanatory section of the bill.
The Prime Minister’s Office and the Attorney General’s office also welcomed the decision.
The Securities Authority has characterized the supposed investments as gambling by another name. In addition, it noted:
“Various enforcement authorities, including the Securities Authority, recently received many severe complaints about many financial losses suffered by customers in various countries throughout the world as a result of activity in Israel trading floors operating with overseas investors, especially involving activity in binary options,” it was stated in the explanation.
“This phenomenon has assumed much larger proportions, and has generated a major negative worldwide impact, while significantly damaging Israel’s image in general, and that of the capital market in Israel in particular,” the Securities Authority wrote.