Israel’s Parliament to Debate Binary Options Trade

The lawmakers in Israel will on January 2, 2017 meet to discuss the hot subject of binary options. Will the parliament relax regulations of binary options industry or tighten them?

Israel’s parliament is moving to debate binary options at a time when the country’s securities regulator has waged a massive war against binary options firms, accusing them of misleading investors and causing them losses.

The Israel Securities Authority (ISA) has prohibited the sale of binary options products within Israel and it is taking the war abroad. But it also recently emerged that binary options industry employs thousands of people in Israel and contributes close to $1.3 billion in taxes to the country, leading some to question whether stifling the industry would produce more economic harm than good for Israel.

Parliament likely to fuel war against binary options operators

But the meeting of Israel’s lawmakers early next year is unlikely to offer any reprieve for binary options operators going by public sentiments in Israel and reports on local media.

While the problem of capital outflow from emerging economies to the U.S. provides an incentive for Israel to slow the war on binary options industry to avoid sparking a wave of mass layoffs, many in and outside the government see binary options industry as a stain. That means lawmakers wouldn’t risk sending a signal that could portray them as being sympathetic to an industry that has caused pain to many citizens.

While the parliament will be debating the state of binary options industry in Israel, the lawmakers are expected demand more action from the ISA to stop binary options firms based in the country from selling their products to overseas investors.

Taking the war offshore

The ISA chief, Shmuel Hauser, earlier asked the Attorney General, Avichai Mendelblit, to consider amending the securities to laws to empower the agency to bar Israel-based binary options firms from marketing their products abroad. According to Hauser, binary options trade is an illegal gamble disguised as investment. The ISA is also worried that the involvement of Israel firms in binary options trades is giving the country a bad reputation.

In binary options trade, an investor gains by correctly predicting the price movement of an asset such as a stock or currency pairs like EURUSD or USDJPY.

The Euro has weakened against the dollar as recent interest rate hike has made U.S. yield-assets more appealing.

Source: Tradingview.

But the industry has recently been marred with claims of scam, sparking a wave of complaints and inviting regulatory wrath.

While there are regulated binary options firms operating within the law and ethics, the rise of unregulated binary options brokers has tainted the industry and heralded an era of tough regulations for everyone.

As the ISA waits for the review of the securities law to allow it ban Israel-based binary options firms from recruiting offshore customers, the agency has been collaborating with international peers like the SEC in the U.S. to clampdown on binary options firms abroad.

Belgium in blanket ban

Several European Union member countries have already banned marketing of binary options products in their jurisdictions or are working on legislations to ban such activities. And Belgium has taken the radical measure to issue a blanket ban on all retail binary options trading in the country.

Other than regulators, payments processors such as Visa and MasterCard have also joined the war against binary options firms. The payments card companies are declining to process deposits to binary options firms operating in jurisdiction where the activity is outlawed.

As for the case of Israel, handing the ISA more powers could effectively kill binary options industry in the country.