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Israeli government and ministerial committee for legislation approves the Binary Options bill, prohibiting trading platforms operating from Israel to offer binary options to investors overseas


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ISA Chair Professor Shmuel Hauser states, “Beyond the grave economic harm caused to  citizens all over the world, binary option marketers also cause grave, destructive damage to Israel’s image, which is quickly gaining momentum and fueling antisemitism against Jews in general and Israelis in particular. This law will allow the ISA to take unprecedented action against those parties that currently operate in Israel and cater to clients outside Israel, and to impose civil and criminal penalties, up to the imposition of actual jail time.”

The government and the ministerial committee for legislation approved today, June 18, 2017, the Minister of Finance’s proposed amendment to the Securities Law, which prohibits trading platforms operating in Israel to offer clients outside Israel to trade in binary options. The bill will be passed to the Knesset for its approval, after which the law will come into effect three months from the date of its publication in Reshumot, the official gazette.

Approximately one year ago, the ISA prohibited trading platforms to trade in binary options with Israeli clients. It is the ISA’s position that trading in binary options is essentially similar to gambling. For this and other reasons, the ISA prohibited platforms from offering binary option trades to Israeli clients. Nonetheless, in the current legal situation, trading platforms that operated in Israel exclusively vis a vis overseas clients could trade in various financial instruments, including binary options, without being subject to any regulation or oversight.

Recently, various law enforcement agencies, including the ISA, have received a large number of serious complaints of extensive financial losses sustained by clients in various countries around the world as a result of trading activities on Israeli trading platforms, especially with respect to trading in binary options. This phenomenon has gained momentum, creating negative repercussions worldwide, causing significant damage to the image of the State of Israel in general, and to the reputation of its financial markets in particular.

To address this situation, the ISA, the Ministry of Finance, the Attorney General, and the advisory and legislative department of the Ministry of Justice jointly prepared the bill. The bill grants the ISA specific enforcement powers regarding the activities of trading platforms that operate in Israel and cater exclusively to clients outside Israel. The bill prohibits such platforms from offering their overseas clients to trade in binary options, and determines that offers to trade in binary options constitute a predicate offence under the Prohibition on Money Laundering Law, in view of the criminal features that may accompany such activities.

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