As the Israeli regulations are expected to be enacted within a year, some applicants seem to be taking steps on the ground. According to the information obtained by Finance Magnates, several Israeli clients of Plus 500 were forced to close their existing accounts and were directed to opening new ones.
Such steps can differentiate the companies intending to obtain a license from those using the application to exploit a legal loophole
The new accounts’ terms offer much lower leverage than the typical Plus500 offering. Unsurprisingly, the adjustments made to the offering are in full compliance with the harsh regulatory framework for forex and CFDs brokers willing to legally operate in Israel.
In April, Finance Magnates revealed that Plus500 would be among the applicants for the Israeli license. With relatively a big number of applicants with the Israeli Securities Authority (ISA), it seems that at least some firms have merely applied for a license in order to get a waiver for operating legally in Israel until their application has been reviewed by ISA.
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As the process will reportedly take as long as a year, such proactive steps by brokers like Plus500 can be understood as the first major distinction between companies intending to obtain an Israeli license and those who merely use the waiver to take advantage of a legal loophole for that period of time.
Elad Even Chen, Finance Director at Plus500, confirmed that the broker has commenced implementing the requirements of the Israeli regulator as part of its application process.
If the accounts changes at Plus500 are indeed due to the new regulatory framework in Israel, a number of other brokers operating in the country could also take similar measures shortly. That in turn could lead to a diminished local retail market, much like the US precedent. However, it remains to be seen if the Israeli regulator is able to act as effectively as the American one in terms of enforcement.