Israeli Regulated Forex Brokers face lower FX Leverage trading rules


Israeli Regulated Forex Brokers faces lower leverage on trading and Israeli Securities Authority (ISA) wants to mandate publishing loss statistics.
04 November 2019, AtoZMarkets – The Israeli forex industry is about to face another blow to its operations in the country. The ISA on Sunday announced its intention to follow in the footsteps of its European colleagues. The proposed framework will include a reduction in the leverage effect on trades, as well as transparency requirements on traders’ profits and losses. In early 2018, ISA bans exotic currency pairs.

Forex leverage Rules In Israeli

The new three-level leverage will be:
  • High-risk trading leverage from 1:20 to 1: 5.
  • Medium risk trading leverage from 1:40 to 1:20
  • Low-risk trading leverage from 1: 100 to 1:30
Brokers will also be required to report the share of their brokers’ gains and losses. Currently, these data are not public and are collected by ISA on a monthly, quarterly, and annual basis.

ITAA Support This Decision

Tzah Druker, head of the Israeli Trading Arena Association (ITAA) and chairman of TGL Colmex Capital Markets Ltd. (one of four ISA licensed brokers), said he does not seem worried over this decision. He said that the Association and its members are trying to advance this legislation. This decision stems from a long process that ISA is leading. And in which they have been involved for about a year. Not only they are not against this plan, but they support even most of its components.
Adapting Israeli regulations to those of the EU and other countries is a necessary action.Israel is currently in a political stalemate after two electoral cycles that have yielded similar results. It is unclear whether the different parties will be able to form a government. Or whether the country is heading to the polls for the third time in a year. The current political situation could lead to the postponement of this initiative (as well as other critical financial laws).
Nevertheless, if the ISA and ITAA reach an agreement, these restrictions could be applied for the brokers themselves. They aim to reach an agreement with ISA. Regardless of the legislative process, and if they find common ground, Israeli regulated forex brokers will adopt the measures themselves. In 2018, ISA permits Leveraged Trading on Stock Exchange. That being said, Druker believes that this measure must be part of a broader change in trade law. The simple reduction in leverage is not enough. ISA should also broaden the range of financial tools an Israeli broker can offer investors. Offers are such as low leverage cryptocurrency trading, for example, can be a good step forward.

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