Court ruled against ISA Algo Trading case


18 April AtoZForex, Amsterdam — The Tel Aviv district court has ruled against ISA algo trading case with USG Capital. Marking for the first time in history, that a broker from Israel is allowed to have a platform that supports algo trading. Considering that the court ruled that USG’s offering of algo trading services does not imply that the broker is providing investment advices.

The start of ISA algo trading case

According to Globes, an Israeli business newspaper, the Tel Aviv District Court overturned the earlier decision of the Israel Securities Authority (ISA) imposed on USG Capital. Back then ISA alleged that USG Capital’s algo trading operations were not licensed. As a result, ISA froze the algorithmic trading operations of USG Capital.

USG Capital filed a basic petition after the decision of ISA and the court accepted it. Soon after the court conducted its investigation, it was concluded that providing algo trading services on the platform is not the same as providing investment advices. Therefore, the court has ruled in favor of USG Capital and overturned the earlier ISA decision.

USG Capital still faces restrictions

Nevertheless, USG still faces a number of restrictions upon its algo trading services. The key restriction relates to USG Capital’s offering of algo trading trainings through its trading software. ISA argued that providing algo trading trainings has too much of an impacts on the clients’ independent trading performances.

Due to the inconsistency, ISA restricted the broker to continue its interaction with the clients about the usage of the algo trading program. Instead ISA, would only allow USG Capital to provide technical support. Coming to the decision in the ISA Algo Trading case, the Tel Aviv District court has agreed with ISA on this particular restriction. Hence, USG Capital still needs to adjust its services for algo trading.

An obstacle for ISA?

Despite it’s provisional order from the court, a lot can be learned from the ISA algo trading case. Considering that the court has set a new landscape for Israeli brokers that are interested in providing the algo trading services. The court ruled against the financial regulator in the ISA algo trading case, which means that brokers are allowed to offer algo trading services without obtaining a trading license.

Marking a big setback for the ISA, as the regulator has been trying to set a regulative landscape where every firm related financial investments need to be licensed in its region. In order to battle off the frauds and scams operating in the region, avoiding recent cases like UTrade Ponzi scheme. Now, it remains a question if ISA will appeal the decision of the court.

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