Now Israel starts to crack down on binary options firms operating under its control
ISRAEL’S parliament, the Knesset, has taken the first steps towards a ban on binary options firms operating from the country.
It is already illegal to market binary options to anyone within Israel’s borders, but regulations still allow these high-risk so-called investments to be sold to clients in other countries, including Britain.
Firms typically open an office in Cyprus, where the investment regulator is regarded as weak. Armed with a Cypriot licence, they can then invoke European Union rules to demand admission to every other member country.
Knesset member Karin Elharar, who is leading demands for a clampdown, said: ‘It is not acceptable that people are able to operate from Israel and cheat people around the world.’ Binary options have emerged as a major scandal in Israel since it was found that many firms that claimed to be based in financial centres such as London are actually controlled from Israel.
A statement issued by the office of Prime Minister Benjamin Netanyahu warned: ‘When someone enters a casino, he knows he’s a gambler. But too often innocent people are losing their savings when they are tempted by offers to trade binary options marketed to them over the phone, without having the full extent of the risks to which they are exposed explained to them.’
Many countries, including the US, Germany, France and Belgium, have taken action to restrict or ban binary options, which are a highrisk bet on stock market or commodity price movements over a particularly short time, often just seconds. In Britain the Financial Conduct Authority refuses to regulate the sector, which it regards as gambling.
But the Gambling Commission says it has no powers as bets are regarded legally as being placed offshore. The Treasury has been mulling this over for almost two years without taking any action.
Meanwhile, thousands of British investors have been tricked into losing millions of pounds.