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The Reforms Committee approved the “Binary Options” Law prohibiting trading platforms operating in Israel from offering binary options to investors in Israel and abroad


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15 Av 5777

Israel Securities Authority Chairman, Prof. Shmuel Hauser: “Beyond the serious financial damage to the world’s citizens, the trading platforms offering binary options are causing major and destructive reputation damage that is growing and accelerating and fueling  anti-Semitism toward Jews in general and Israelis in particular. The Law will give the Israel Securities Authority ability to take unprecedented actions against those currently operating from Israel with customers outside of Israel, by imposing stringent civil and criminal sanctions, including imprisonment”.

The Knesset Reforms Committee headed by M.K. Azaria (Kulanu) approved today, 7 August 2017, the Minister of Finance’s proposed amendment tothe Securities Law which prohibits trading platforms operating in Israel from offering customers inside and outside Israel to trade in binary options. The proposed amendment will be passed for voting and approval by the Knesset on its second and third readings, and after its approval, the Law will take effect three months after the date of its publication in the Reshumot.

In March 2016, the Israel Securities Authority prohibited trading platforms operating with Israeli customers from trading in binary options. In the ISA’s opinion, the trade in binary options is akin to gambling. For this reason and other considerations, the Authority has prohibited these platforms from offering Israeli customers to buy binary options. However, given the existing legal situation, trading platforms operating in Israel only with foreign customers are still able to trade in various financial instruments, including binary options, without any regulation or oversight.

Various enforcement bodies, including the Israel Securities Authority, have received numerous serious complaints regarding financial losses of customers from various countries around the world as a result of trading operations in Israeli trading platforms operating with investors abroad and especially in connection with activities in binary options. This phenomenon has greatly accelerated and created broad negative feedback globally, causing considerable damage to Israel’s reputation in general and to the reputation of the capital market in Israel in particular.

Against this background, the Israel Securities Authority worked with the Ministry of Finance, the Attorney General, and the Counseling and Legislation Department in the Ministry of Justice to formulate the proposed amendment. The proposed amendment gives the Securities Authority certain enforcement powers with regard to the activities of the trading platforms managed in Israel but directed only at customers outside Israel. The proposed amendment prohibits such platforms from offering their clients abroad to trade in binary options and it determines that trading in binary options will be a predicate offense pursuant to the Prohibition on Money Laundering Law in view of the criminal features that are likely to accompany that industry.

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