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The Knesset plenum approved second and third reading of the Binary Options Law, which prohibits trading platforms operating in Israel from offering binary options to investors in and outside Israel

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ISA Chair Professor Shmuel Hauser states, “This is one of the most important legislative amendments recently approved by the Knesset. Trading platforms that offer trading in binary options cause grave, destructive damage to Israel’s image, which is quickly gaining momentum and fuels antisemitism against Jews in general and Israelis in particular, and undermine Israel’s foreign relations. The law will allow the Israel Securities Authority to take unprecedented action against those parties that currently operate in Israel and cater to clients outside Israel, and to impose on them civil and criminal penalties, up to the imposition of actual jail time.”

Today, Monday, October 23, 2017, the Knesset plenum approved the Minister of Finance’s bill to amend the Securities Law, prohibiting trading platforms operating in Israel from offering trades in binary options to clients who are in or outside Israel. The law will come into force three months after its publication in Reshumot, the Official Gazette. 

In March 2016, the Israel Securities Authority (ISA) prohibited trading platforms from trading 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 operate in Israel exclusively vis a vis overseas clients still may trade in various financial instruments, including binary options, without being subject to any regulation or oversight.

Various law enforcement agencies, including the ISA, have received a large number of serious complaints concerning extensive financial losses sustained by clients in various countries around the world as a result of trading activities on Israeli trading platforms that operate vis a vis overseas clients, 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 market 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 offense under the Prohibition on Money Laundering Law, in view of the criminal features that may accompany such activities. The Law will allow the Minister of Finance in the future to determine similar prohibitions regarding other financial assets, insofar as they are similarly abused.

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