March 22, 2016
The Israel Securities Authority (ISA), headed by Prof. Shmuel Hausner, decided not to approve binary options for trading on regulated trading platforms, due to the features of these options. The ISA’s decision is based on the complex nature and pricing challenges of binary options, on the one hand, and the fact that prices are not determined by multiple market participants, on the other. The ISA asserts that binary options cannot be effectively regulated and therefore does not consider binary options an appropriate financial instrument for regulated trading platforms.
Due to the special features of binary options and the nature of trading platforms, trading in binary options is similar in its essence to gambling. Trading in binary options on regulated trading platforms will adversely affect not only all the clients of these platforms (including “sophisticated” clients) but also the reputation of the market as a whole.
According to the ISA’s decision, any application for a trading platform license that includes binary options will be rejected, unless the applicant notifies the ISA within 30 days that it amended the application to conform to the ISA’s decision and it ceased all trading in binary options, excluding client withdrawals, closing of accounts, and closing of positions.