Israeli FX license growing in demand

Israeli Securities Authority15 June, Lagos – The Israeli Securities Authority in recent times has taken steps to fortify the depth of regulatory coverage applying to the Forex industry in the region. Even so, these stricter measures to be applied have not discouraged brokers from seeking license in the area. The Israeli regulators today published a 21 broker list, representing a complete rundown of brokers seeking license.

The extent of demand for this license is somewhat a surprise as the Israeli FX license grows in demand, considering that it was expected that brokers will rather flee the region due to stricter regulatory requirements. Of this list though, only about 9 brokers were reported to have gone ahead with the required submission of their application, as of end of April. “There is no room for 21 brokers in the Israeli market,” said Mr. Noy.

In its statement, the regulators clarified that the process is still very much fresh, considering that most of the brokers are yet to come through with the required paper work for preliminary review by the ISA. The companies which are on the list are allowed to carry on business by seeking Israeli clients pending the time the temporary transition phase, which may take up to a year is complete. Although these firms are more or less unsupervised at the moment.

On the other-hand, firms which have not even requested a license are prohibited from operating. ”Such companies are breaking the law and traders should take into consideration the risks involved,” as clarified by the ISA.

Some important aspects of the regulator’s requirement includes:

  • leverage limitations (ranging from 1:100 for “low risk” products like currencies and gold, 1:40 for several indices and a reduced 1:20 for all other assets);
  • minimum capital requirements ranging between $200,000 to $ 4 Million,
  • AML and marketing practices endorsed by other regulators worldwide.

There are two ways to look at the large number of applications the Israeli authorities have to deal with:

  • It could serve as a vote of confidence in the regions standards and operational requirements
  • It could enable operations of unsupervised operations by these brokers during the lag between now and when they are fully regulated.

It remains unclear what the Israeli parliament’s ruling on foreign clients will be. That is, whether or not the local brokers targeting international clients will be subject to additional requirements.

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