After banning trading in binary options in Israel, it seems now the local regulator, the Israel Securities Authority (ISA), is also planning to ban advertising of such investment products abroad.
According to a report of the local TV channel 10 News, the ISA head Shmuel Hauser has said that he would request amendments to the law that ban advertising of binary options abroad, because they “damage Israel’s image”.
This is not the first time Hauser speaks up against the binaries brokers. Over the summer, The Times of Israel reported that he vowed to urgently tackle massive worldwide fraud by Israel-based binary options companies. “I see this on a personal level,” Hauser told the newspaper, “not just as a regulator, but as an Israeli citizen and as someone who is disgusted by fraud and especially by the type of people who take money from the unfortunate, from orphans and widows.”
In essence, the introduction of a ban on advertising abroad would mean that the Israel-based call centers of the major binary options brokers will have to be shut down. After the ISA crackdown on the local binary options industry, the majority of brokers moved out and set up daughter companies, mostly regulated in Cyprus, but retained their call centers which solicit clients globally.
According to sources quoted by the Finance Magnates site, the European regulators are pressing ISA to take measures against those call centers.
Meanwhile, another European regulator – Denmark’s FSA (Finanstilsynet) warned the country’s citizens of the risks of trading in binary options. “Binary options are a very speculative product that has far more in common with gambling than investment. It has also been shown that a number of providers violate basic consumer rules. Therefore, we urge consumers to stay away,” said FSA’s head Ulla Brons Petersen in a statement published on the regulator’s site.
Further in her statement Brons Petersen notes that the binary options brokers often use aggressive sales techniques and offer starting bonuses, which are only available after making a deposit. “There are also problems with clients getting their funds back. Finally, the companies’ salespeople often do not abide by the rules of responsible investment advice”, Brons Petersen warned.
France and Netherlands have already announced they are also taking steps towards banning the advertising of binary options and some types of CFDs to local residents, while Belgium banned the online distribution of of over-the-counter (OTC) binary options, spot forex, and CFDs with leverage. Germany also announced plans in the same regard.