February 1, 2017
In reviewing the applications submitted to the ISA for a trading platform license, the ISA examined the issue of binary options trading.
An example of a binary option is a trade in which the option buyer is guaranteed a fixed profit (sometimes a fixed percentage of the amount invested) if a specific event occurs, yet loses the entire investment if that event does not occur. Typically, the event is whether the price of an underlying asset (such as a stock index) will be over / under a specific price on the expiry date of the option, or not.
It is the ISA’s position that trading in binary options, such as the binary options that license applicants wanted to offer in Israel, is similar in nature to gambling.
For this and other reasons, the ISA has prohibited licensed trading platforms to offer binary options to Israeli clients.
Nonetheless, several trading platforms operating in Israel continue to offer binary options to foreign customers overseas. In most cases, these customers lose their investments. Current legislation does not allow the ISA to take action against such trading platforms or against criminal elements that operate such trading platforms. If the activity of these trading platforms constitute a criminal offense of the penal code, the Israel Police is responsible for handling these cases.
Together with the Attorney General and the Ministry of Justice, the ISA is currently drafting an amendment to the Securities Law that will expand the ISA’s authority to take action also against trading platforms that offer binary options to clients outside Israel.
The Reforms Committee approved the "Binary Options" Law prohibiting trading platforms operating in Israel from offering binary options to investors in Israel and abroad (August 07, 2017 )