This article was written by David Malits, CEO and founder of David Malits Public Relations.
Trading platforms (forex companies) in Israel enjoy a terrible reputation, and not without good reason.
For years, the trade has been managed as the naughty boy of the capital market. Dozens of companies were active in the market when it was at its peak. Vast sums of money flowed into the unsupervised trade, which was fertile ground for embezzlement, and grabbing opportunities fast, with everything that that implies.
The foreign currency trade is a by-product of completely legitimate financial activity, and at the outset, the trading platforms were a cheap alternative to the banks. The element of leverage which came about later made the investment substantially riskier and less solid.
Together with the risk came the big money, which met on the unsupervised island, and turned the trade into the second home of sharp traders, who knew how to make a fortune, the underworld, white collar people who knew how to make the most of loopholes in the system. Many investors lost their money as a result of crooks active in the trade, and also legitimate companies who sold their services.
One must understand, forex is not a bad product. Contrary to its reputation, as in any trade, the chances of an investor who knows what he is doing, and who operates within a legitimate company, depend upon his ability to understand the market, and to act accordingly.
The need for basic knowledge and understanding of investment in trade platforms, is no different whatsoever from the world of commerce. The percentage of winners in these companies is very high, and stands at dozens of per cent. These are not the data that characterise a casino. Those facts, are more difficult to justify or to prove, and various streams in the media do not accept that.
The trade platforms have been undergoing a radical change recently. It is over a year now that bodies have been active and calling themselves ‘the regulators’. The dirty tricks that characterised the trade will gradually become fewer, and consequently the trade will attract less fire from the media.
It seems that there is a possibility of a positive future, for those who can understand that, and can adopt the new laws.
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Now, with the marking of territory at the centre of the activity of the Israel Securities Authority, the witch hunt is at its peak.
There is no pause in the flow of headlines from the ISA to the media, and from the crooks to the criminal company, and we are witness to the comprehensive activity which sometimes harms institutions that struggle to adapt themselves to the new conditions. It is corny and populist to say that the media only has eyes for blood, and ratings, and acts accordingly; in most cases the media has no desire.
We are not talking about a body with decentralised understanding, composed of components. At the end of the day, the media are people. Behind every page in a newspaper, stands a private person who has formulated an opinion. His opinion becomes influential as a public verdict because of the media label on which his piece is said. Without doubt, the incitement, the claims, the regulation, the various politicians’ speeches, etc. crystallise into a total media organism.
Everyone wants a piece of the cake, everyone wants to be part of the party, every reporter in the trade desperately wants to uncover the next scandal.
The provocation in the world of media is taken advantage of by those seeking quick publicity. It was the forex platforms which acted, in the past, in the financially unsupervised trade. Now, it is certain law firms, who act on the media platform, which in turn does not check itself thoroughly. A senior reporter spelled this out for me, in the clearest possible manner, in order to make plain how shallow the coverage is. “A suit against forex is an item, and it does not matter for what the company is being sued.”
So, in that situation, who needs marketing content?
Twenty-one forex companies submitted requests for licences. The number of companies that were not disqualified is getting smaller. Those that survived the process are the companies that act according to the law.
The trade platforms will only do themselves good if they would realise that they need to win the confidence of the media in the mid and long term. At the moment, only one side can be seen. The trade platforms must win the confidence of the media world, and remove the sting from these futile suits; they must introduce transparency, and create a new relationship with the journalists, and the media.
Media people, who will see reliable reports, and who will be shown the foreign currency trade in depth and in a matter-of-fact manner will receive a balanced perspective. They will not see in the forex platforms an immediate and unjustifiably guilty party.