The Battlegrounds of Binary Options Part 3

The last of this three-part series looks at alternatives available to Israeli binary option brokers if there'll be a ban.

In our previous article, we took a look at the different moves made by various EU country regulators, including that of the Israeli, ISA regulator. In this article we consider the range of alternatives available to Israeli-run binary option brokerages, who wish to survive this period of tightening on binary regulations.

Three Options

Should a ban be put in place, the options available to sales departments of Israeli binary options companies are limited to the following:

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  1. Move the call center to a country that does not restrict the practices.
  2. Automate the sales and retention funnels.
  3. Migrate the business from Binary Options into Forex.

The first option would not be difficult to achieve. However, the reason for the success (and proliferation) of Israeli calls centers is the demographics found in Israel. Israel attracts a large number of highly educated foreign nationals.

Because of the language and local employment market, international sales is often a promising and lucrative career, and attracts a higher quality of applicant than is usually found in other locations. Trying to duplicate this quality at the same low cost elsewhere would be a seemingly impossible task.

The third option is on face value a logical step, Binary Options brokerages already have their operations set up and all they would need is additional technology.

This recalibration of services to thrive in the Forex industry can be a natural step if done properly, however not necessarily a simple one. Whilst there is the possible scope for effective integration into Forex trading, breaking into an established market against big and experienced competitors without the right support of a technology partner, would make this a risky option.

The second option, automation of sales and retention activities, would play to the strengths of Israeli technology capabilities. For brokerage owners, an effective technological method that would replace existing sales staff, who are costly and manually inefficient, with a streamlined, cost effective super solution, is a groundbreaking opportunity.

The challenge however would be the effectiveness of the solution, given the challenges with automation of similar services. Perhaps surprisingly, there are automated options already on the market, replacing the traditional call center with sophisticated automated messaging funnels and other means to duplicate the sales needs of the company.

Reports on these methods indicate a higher lead conversion, FTD values and click through rates. Cleverly, the system has taken the strongest elements of the existing sales service and synchronized it with existing automation methods that already comprises much of the online trading experience.

This is something that every brokerage should be investigating because of its game changing upside.

Is the ISA Position Justified?

The position of the ISA seems to have crossed the line from regulator to moral crusader. The recent statements by the Chairman of the ISA, that Israeli binary options companies are “an ugly phenomenon that is tarnishing Israel’s image”, shows a striking departure for a regulator.

In any case, the veracity of this claim is highly dubious. To “tarnish Israel’s image” would require the world to associate Israel with the binary options industry. This is something that appears unlikely, considering how few of the companies whose sales activities are in Israel are actually incorporated in Israel.

The extent of the departure is clear when you consider that the ISA is a local regulator and therefore tasked with protecting retail investors in Israel, which it has already done with its ban on Binary trading for Israeli citizens.

The further crackdown on sales activities directed overseas is completely outside of its jurisdiction. That it is proposing this and striking with a morally insightful tone, speaks volumes about attitudes within Israel toward the proliferation of “Israeli” binary options call centers.

The politicization of this issue and negative press is the most worrying aspect for the Israeli binary options industry, who fear that a ban on local sales activities may actualize as long as there are political points to be gained.  Whilst inflammatory language coming out of Europe is also high, regulators have taken a more even-handed approach and have stayed within their jurisdictions.

It remains to be seen how effective regulations will be in achieving the goals of the regulators, however it is clear that the battle lines have been drawn and the first shots have been fired in the battle of Binary.

This article was written by Yael Warman, Content Manager at Leverate.

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