26 May, AtoZForex.com, Amsterdam – It appears that regulators do their best to develop an appealing regulatory in Israel against CySec broker flow. ISA kicks in today. What are the consequences?
Last week, the Trading Arenas Association organised a learning day for Israeli brokerages about conforming to the new regulations of Israel Securities Authority, commonly abbreviated as ISA. The learning day took place at the reputable Tel Aviv Chamber of Commerce, while local brokers were presented with the new legislation and compliances. As of today, the new Israeli watchdog ISA will regulate the CFD and forex market in Israel.
For the established brokers in the jurisdiction it means that they will be obligated to operate and adjust per the new demands of ISA. In case the established brokers do not comply, resultantly they will be disqualified and not receive the recent established Trading Arena license. In more detail, brokerage need to adhere to all new conditions under the Israeli Trading Arena, an example is the compliance through the local SOX, internal controls and financial reporting.
Insurances schemes mandatory
Aside complying with the strict regulations of ISA, the brokerages are also required to have various insurances schemes in place. The purpose behind this motive is to ensure that their clients are protected against any cyber attacks, lawsuits, employee malpractice, server malfunctions and other pressing issues. Depending on the size of the operation, this newly set requirement will cost the brokerages a substantial amount of money on a yearly basis.
Limitation on marketing
Furthermore, new regulations were imposed on cost of capital, manpower and the processing time of administrative operations. However it does not subside here, as it is publicly made aware that the ISA is going to limit their marketing activities. The common bonuses are no longer eligible to clients and brokers will be required to publish three disclaimers on each of their publications. Hence, online banner ads will become less effective. Additionally, the brokers will be restricted to quickly utilize any new marketing trends, since it will be now required to get every new ad pre-approved by the ISA.
More measures to protect Traders
On the contrary, the ISA has taken measures to benefit Israeli traders, since an arbitrage committee was set up for the purpose of aiding traders in events of having legal disagreements with their brokerages. This independent committee consists out of retired judges and offers traders the possibility to incur inexpensive legal battles in courts. On top of this advantage, traders’ funds will be safeguarded by each broker, as pointed out earlier the brokers are now obligated to arrange multiple insurances and segregated client accounts.
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