TEL AVIV, Oct 23 (Reuters) - Israel's parliament on Monday gave final approval to a law that bans local firms from selling binary options overseas by online trading, giving market regulators the authority to begin a broad crackdown.
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 time, sometimes as short as a minute.
The sites selling binary options cause serious harm to Israel's image, encourage anti-Semitism and have hurt Israel's foreign relations, Shmuel Hauser, chairman of the Israel Securities Authority, said following the vote.
"The law will enable the securities authority to act in an unprecedented manner against those entities operating from Israel vis-à-vis clients abroad, by imposing civilian and criminal sanctions including imprisonment," he said.
The amendment to the country's securities law received initial approval in parliament in June and will take effect in about three months.
The law will enable the Finance Ministry to impose bans in the future on other financial assets if they are sold in a harmful manner, the securities authority said.
Israeli regulators say they have received many complaints regarding losses binary option traders in various countries have suffered. Israel had already banned the domestic sale of binary options last year, the first country to do so.
A Reuters special report published last year 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, eiting by Larry King)