TEL AVIV, June 26 (Reuters) - Israel's parliament on Monday gave initial approval to a law banning locally-based firms selling binary options overseas by online trading.
Binary options involve placing a bet on whether the value of a financial asset - a currency, commodity or stock - will rise or fall in a fixed timeframe, sometimes as short as a minute.
The proposed amendment to the country's securities law, approved by the cabinet a week ago passed unopposed, with 31 lawmakers voting for the bill in the first of three parliamentary votes. It will now go to the Finance Committee where it can undergo changes before returning to the parliament for two more votes.
Breaking the law will be punishable by up to two years in prison and if money laundering is proven, punishment could reach 10 years in prison.
Israeli regulators say they have received many complaints regarding losses suffered by binary option traders in various countries. Israel already banned the domestic sale of binary options last year, the first country to do so.
A Reuters special report published in September shed light on the rapid rise of the industry in Israel. London-based lawyers said hundreds of their clients were duped out of vast sums of money by some Israeli firms. More than 100 operators are estimated to be based in Israel, a technology hub. (Reporting by Tova Cohen Editing by Jeremy Gaunt.)