Israel’s parliament on Monday unanimously passed a law banning local firms from selling binary options overseas. The ban will officially come into effect within three months of this approval.
This is a significant blow to the Israeli trading technology sector as it also targets binary options platform providers. The law bans them from offering any supporting services and basically limits them to selling only off-the-shelf software. The Israeli developers, such as SpotOption, TechFinancials and more, will have to adjust, relocate all their staff outside the country or let them go.
The binary options business has drawn broad international criticism over allegations of fraudulent practices. In response, the Israeli authorities prepared legislation to close down entire binary options sector in the country, which employs thousands of Israelis through more than 100 companies.
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The amendment to the country’s securities law was drawn up by the nation’s financial regulator, the Israel Securities Authority (ISA), which is now armed with additional enforcement powers to begin a broad crackdown on the fraudulent industry that has fleeced billions of dollars from victims worldwide over the past few years.
Israel already banned binary options firms from targeting Israelis in March, but the country’s watchdog was unable to bar Israel-based brokers from selling their services abroad.
The legislation authorizes the ISA to go after firms selling the product and jail those who breach the ban for up to 10 years if money laundering is proven.
Shmuel Hauser, Chairman of the ISA, highlighted the damage of binary options to Israel’s international image and the reputation of its capital markets. He said following the vote: “The sites selling binary options cause serious harm to Israel’s image, encourage anti-Semitism and have hurt Israel’s foreign relations.”
Mr. Hauser added: “The law will enable the securities authority to act in an unprecedented manner against those entities operating from Israel vis-à-vis clients abroad, by imposing civilian and criminal sanctions including imprisonment.”