Israeli Securities Authority Issues Warning before Regulation of Forex Trading Begins

The announcement comes amid "inaccurate publications concerning supervision," informing that the watchdog will not supervise all existing market players but

ISA long logoThe Israeli Securities Authority (ISA) issued today a clarification to the public that the supervision of the forex trading brokers has not yet begun, along with a warning about the risks involved. The ISA has decided to make the announcements “in light of inaccurate publications concerning supervision.”

In the paper, the financial watchdog reminds the public that the Israeli parliament’s Finance Committee recently approved the Securities Regulations which is intended to apply ISA’s supervision on the activities of trading arenas (as forex, CFD and binary options brokers are referred to by the law).

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The Regulations are expected to be published soon, the ISA said, and will take effect six months from that point. The supervision will not be immediately implemented throughout the industry, but rather individually upon the approval of each brokers’ application for license. Operating without a license will then be illegal.

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“Contrary to inaccurate publications on this matter,” the announcement states, “the actual supervision of activities for which a trading platform license is required has not yet begun and none of the platforms currently has a license from the ISA.” The public therefore, “must pay heed to the many risks involved in activities on trading platforms until supervision begins.”

The risks that the ISA lists include, among others, the complexity of the activities, high leverage, lack of transparency, stability of the platform, and the fact that the brokers are frequently the opposite party to the transaction being performed by the customer. After supervision begins the activity on trading platforms will be prone to such risks as well, the ISA added, in the absence of any supervision they are likely to be especially great.

It should be noted that to this day the ISA has never published a warning about the unregulated and unsupervised forex trading that has gone on at the major Israeli banks, which will remain outside the boundaries of the new law.

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