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Screenshot of a breaking news alert e-mail from Q2 2017
Israeli financial regulator the Israel Securities Authority (ISA) has issued a Dealers’ license to five Retail Forex brokers, allowing them to formally begin taking on Israel-based traders. The licenses take effect as of October 31, 2016.
New Israeli regulations took effect effect in July covering different aspects of online trading. The ISA has been taking aggressive moves lately to reform the way online (and offline) brokers engage with clients, including the banning of all binary options trading.
Key elements of the new Israeli Forex regulations include:
- No bonuses or other gifts may be granted to clients.
- Deposits by clients can be made by bank/wire transfer or credit card only, not by debit card.
- All brokers must ask clients to view and sign a conflicts-of-interest policy, at least once each year.
- Leverage limits:
- 100:1 on Forex pairs and Gold trading
- 40:1 on Equity Indices
- 20:1 on all other instruments
The first five recipients of what is effectively a Forex Broker license from the ISA are:
- FXCM (at website fxcm.co.il)
- Plus500 (plus500.co.il)
- AvaTrade’s Israeli brand ATrade (atrade.co.il)
- Real Forex (he.real-forex.com)
- First Index (1st-index.com)
A number of other Israel-based brokers which had originally applied for the license eventually withdrew, such as iForex. The withdrawals were mainly due to a realization that with the fairly onerous regulations listed above (i.e. no client bonuses, tight leverage limits), it just wasn’t going to be worth it. Israel is a major Forex industry center with numerous brokerages and platform providers based in the country (as well as affiliate network operators, online marketers, payments processors…). However as a market for traders, Israel’s domestic market of about 8 million people is a relatively small one.
So far, Israeli legislation and ISA regulations allow Forex and Binary Options brokers to operate unfettered (and unregulated), as long as they don’t take on or market directly to Israeli clients.
The full press release issued by the ISA on the new licenses can be seen here (in Hebrew only).