The Knesset State Control Committee, a body within the Israeli parliament overseeing the country’s executive branch, will hold a public hearing on the binary options industry on January 2, 2017.
According to The Times of Israel, the hearing will be open to members of the public with prior registration. At the hearing will be summoned representatives from the Israel Securities Authority, the Israel Police, the State Prosecutor’s Office and the attorney general’s office.
Karine Elharar, chair of the committee and member of the opposition center party Yesh Atid, told the newspaper that she decided to call in the hearing on binary options after she concluded that the government has been too passive and there is no response to what is considered largely a fraudulent industry.
In her words, the committee hearing’s main goal is to coordinate the efforts of the law enforcement agencies and to stop the activities of the binary options brokers.
“Several months ago I was approached and made aware of the painful subject of binary options,” Elharar told the media. “After an extensive examination I reached the conclusion that what the government is doing to tackle this issue is insufficient.”
“It is not acceptable that people are able to operate from Israel and cheat people around the world. Not for nothing has binary options been outlawed in Israel (targeting Israelis), and now we must make sure it will not be possible to do this to people in other countries,” she added.
The binary options brokers who are forbidden from offering their services in Israel, but are largely based in the country, operate with Cyprus licenses. Their call centers for soliciting unsuspecting victims, are mostly based in Israel. According to The Times of Israel’s estimates, there are at least 100 binary options brokers who are either based in the country or are somehow connected to it and make anywhere between $1 billion and $10 billion per annum. The number of people employed in those call centers is in the thousands.
Meanwhile, the head of Israel’s financial markets regulator, the Israel Securities Authority (ISA), Shmuel Hauser said the fraudulent operators will pay a high price.
“Around the world, regulators are trying to decide what to do about binary options — whether it is a legitimate form of trade or not. We are not trying to decide,” Hauser said, quoted by The Times of Israel. “Binary options resemble gambling, and we cannot accept the damage that occurs to investors who invest in this with enormous leverage.”
“Nor can we accept the ugly phenomenon of the aggressive selling of these toxic products to the public. The testimonies that we receive are simply chilling,” Hauser added.
According to earlier reports, ISA is planning to ban the advertising of binary options abroad, which in essence means it will ban the activities of the call centers.
Meanwhile, ISA already fined the unregulated DGI Markets binary options broker and its principal for providing financial services to local investors. At the same time one of the major binary options brokers – OptionRally, has recently almost entirely wound up its activities in Israel and moved its entire business to Cyprus.