The Israel Securities Authority (ISA) has drafted a law that would ban locally-licensed entities from advertising and marketing binary option products outside of the country, online finance media Finance Magnates reported on Thursday. Forex brokers with an Israeli license will not be allowed to offer forex or onboard clients from abroad, unless they are licensed in the respective country.
Moreover, the ban on trading in binary options in the country, which is currently a temporary order, has also been included in the draft project. Israel’s Treasury Minister will be mandated to prohibit other trading products, as it finds suitable.
The news comes shortly after Israel was urged by some EU regulators to change its policies regarding binary options. They showed concern that the ISA is allowing fraudulent activities in the industry. The regulators even expressed opinion at the time that the binary options industry across Europe should be shut down. Israel is notorious as the home of most fraudulent brokers. Brokers cannot do business within the country, but they can still target foreign investors. The country is also a hub for binary options call centers. The ban of marketing outside of the country would mean the end of such centers.
Earlier in February, Times of Israel cited ISA chairman Shmuel Hauser as saying the regulatory body was drafting a legislation that would expand its authority and enable it to shut down entities that solicit customers abroad, as currently its authority is limited to the country’s borders. Hauser hinted of the change as early as October last year.
The forex and binary options markets have since recently been regulated in Israel. Binary options trading is banned, while the first forex brokers received Israeli license in September 2016. The first time the ISA imposed a fine on a binary options broker was in November last year.
Binary options have been on the target of other regulators, too. In August last year, Belgium banned the distribution via online channels of over-the-counter (OTC) binary options, spot forex, and CFDs with leverage. France has also banned the online advertising of “highly speculative and risky financial contracts”, such as binary options, forex and CFDs with a leverage greater than 1:5. In addition, the Netherlands and Germany have also announced they consider the ban on the advertising of such instruments.
In the US, trading in such instruments is restricted to on-exchange execution only (via Nadex or Cantor Exchanges). Meanwhile, Quebec’s Autorite des Marches Financiers (AMF) recently proposed the prohibition of the sale of binary options to citizens in the province, becoming the first Canadian province to consider a full ban on this type of instruments.