Binary options remain under pressure this week at a time when options are growing like never before. Google Trends shows searches for binary options rose 400% in the last five-year period worldwide.
In Israel, searches increased nearly 200%, while interest grew the most in South Africa and Nigeria. Canada is also a hotspot for trading, with interest rising as much as 600% in the past five years.
An uptick in interest in the financial vehicle has led to recent regulations harming the industry. South America, where there are no bans in place against trading, has seen binary options flourish, with Chile being a brightspot.
Canada’s government called on Israel this week to ban all trading in binary options immediately. The government is calling for strict regulations against the industry, as Canadians often lose money in the market.
The request by the Canadian government is a result of high-pressure sales tactics used to sell investments to Canadian traders. The rise in popularity of binary options led to 800 Canadians being defrauded by fraudsters using fake names and locations.
The flourishing industry led to over 100 companies operating as binary options brokers in Tel Aviv.
Widespread growth allowed fraudsters to defraud victims worldwide.
Israel’s binary options industry is lobbying lawmakers to consider regulations against the thriving industry instead of a ban. The industry employs tens of thousands of people, according to lobbyists.
Police Superintendent Gavi Biton paints a different picture of the industry. During a February hearing, he stated that there have only been 52 complaints pertaining to the industry since 2009. He believes the latest actions are due to media reports and not fraudulent claims that amount to less than 7 per year.
Tuesday, Judge Ruth Ronen, ruled that binary options were securities and are subject to supervision by Israel Securities Authorities.
The judge ruled that binary options remain a security. The ruling leaves investors unsure of which investment methods are available to them, leading to potential losses.
Strong trading volumes in other countries are leading to a further boom in the market. Japanese volumes rebounded in mid-February, with the forex segment remaining particularly strong to start the year.
Strict regulations on the industry will allow for a clear path to growth and profit for investors. The root of binary options is a risk, like all forms of trading, with the potential for high rewards.
Regulations will allow the industry to remain strong, protect investors from potential fraud and help the 10-year-old industry remain a major employer.