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News sources in Israel are reporting that the country’s new legislation meant to outlaw all aspects of the Binary Options industry from operating in the country has been watered down from its original version. We had earlier exclusively reported that implementation of what’s now known as the Israel Binary Options Law has been delayed to at earliest the end of January 2018.
In hearings held yesterday in Jerusalem by the Knesset’s Reforms Committee, which is meant to fine-tune the bill before it goes back to the country’s parliament for a second and third reading and passing into law, it emerged that the bill which was presented to the Cabinet and then to parliament in late June was altered from what was originally written by the Israel Securities Authority under the guidance of ISA Chairman Shmuel Hauser, with help from bureaucrats from the country’s Ministry of Finance and Justice Ministry.
The original bill was meant to ban not only the operation of a Binary Options brokerage in Israel (or the providing of technology and services used by Binary Options brokerages), but also to make it illegal to sell clients abroad any kind of financial product unless the brokerage was duly licensed in that country.
Apparently, without formal notice that part of the legislation was removed. The version of the bill now being debated will allow Israeli Forex and CFD brokers to continue selling any product which does not fit the narrow definition of a Binary Option to customers around the world.
The Times of Israel has quoted Nimrod Assif, a lawyer who represents victims of Israel-based binary options and forex companies, as saying:
I was astonished to see the current version of the bill. It is dramatically different from the version that the ISA originally published. Basically, somewhere along the way, the part that says trading platforms need a license in the country where the investors are was dropped.
If the bill, in its current version, becomes a law, the only thing that trading platforms in Israel will have to do in order to continue soliciting investors abroad is to tweak the products they offer, to make sure they fall outside the narrow definition of ‘binary option.’ Making that change is not complicated.
ISA Chairman Shmuel Hauser, the key personality behind the new legislation after coming under a lot of pressure to ‘deal with’ the unlicensed brokerages operating from Israeli soil, was quoted as saying:
We received comments from the public concerning the draft law and then we held conversations with people in the industry and decided to reduce the scope of the law so that it just applies to binary options.
An unnamed ISA colleague of Mr. Hauser, hinting at very strong lobbying going on behind the scenes, said:
These were conversations behind closed doors among government officials and ministers.
If the legislation remains as is, the same people who ran Binary Options firms from Israel will be able to continue running unlicensed brokerages from the country targeting traders virtually anywhere in the world – as long the products they market and trade don’t include the legislation’s fairly narrow definition of a Binary Option.
As we reported over the weekend, today’s hearing was just one of three that the Reforms Committee will be holding this week before presenting a final bill back to the Knesset, with the next one being tomorrow, Wednesday August 2.
We will continue to follow this story as it develops.