Israel wants to limit leverage on the Forex market based on ESMA

Israeli Securities Office, ISA, I want to follow suit ESMA and lower your leverage in the Forex market. In addition, he wants to commission the publication of statistics of losses and profits achieved by native traders.

Another country with Forex restrictions

The Israeli supervisory authority announced last weekend that it plans to introduce product intervention on the local market, thus following the footsteps of European solutions. The main change is to be primarily limited financial leverage, although not as drastically as in the case of ESMA.

ISA wants to make the amount of leverage dependent on the risk level of a given financial instrument. It is not known, however, on what basis this risk will be determined. For now, we only know the sketch of the proposed changes, which look like this:

• Low risk trading: from 1: 100 to 1: 30,
• Medium risk trading: from 1: 40 to 1: 20,
• High risk trading: from 1: 20 to 1: 5.

In addition, brokers will be required to publish statistics on the profits and losses of their clients. A similar solution exists in Poland as a result of the introduction of the guidelines of the Polish Financial Supervision Authority since September 2016.

Check it out: Profit and loss statistics of Polish traders for the third quarter of 2019

In an interview with Finance Magnates, Tzah Druker, head of the Israeli Trading Arena Association (ITAA) and president of the board of TGL Colmex Capital Markets LTD (one of four licensed ISA brokers), said he was not worried by this move.

According to Drukera, the Association and its members cooperate with the regulatory body to refine such provisions.

”This decision is the result of a long process that ISA is leading and we have been involved in for about a year. Not only are we not against this plan; we even support most of its components. Bringing Israeli laws into line with those of the EU and other countries is a much needed action. " The Druker said.

Brokers want regulation?

There is a political stalemate in the current situation in Israel. It is unclear whether different parties will be able to form a government or whether the country will go to the polls for the third time in a year. In such a situation, it is doubtful that the regulation of the currency industry should have the highest priority in the activities of the new government. It is not said, however, that with the agreement of ISA and ITAA, brokers will decide to introduce new ideas themselves, without the need for top-down orders.

According to the Printer:

"Limiting financial leverage alone is not enough. ISA should also expand the range of financial tools that an Israeli broker can offer to its investors. For example, offers such as low-leverage cryptocurrency trading can be a good step forward. "

This is another milestone in ISA's efforts to regulate the Israeli Forex market as well as eliminate the binary options industry. A process that began in 2015 has already caused most of the companies in the market to go out of business in that country, while others - such as eToro - have withdrawn their license application and shifted to other regulations.