The forex market is very volatile and unpredictable. Some even compare its trading to the gamble. Everything happens in the span of a few minutes. People gain or lose exorbitant amounts of money. While its hard to predict what will happen on the forex trade market, some governments still try to set on such rules. They hope to help to protect investors’ interests. Israel is one of those countries.
The Israeli Securities Authority has issued a draft suggesting to require from Forex trading companies to publish client losses publicly. The draft is open for public comment. The government’s desire to help people better evaluate the risks before committing the companies propelled the proposition.
ISA wants the companies to disclose to the future clients the actual risk of their potential transactions. They made this decision on the base of widespread speculation about most traders losing money during Forex deals. ISA hopes that if the information about the company’s losses and gains become public, it will allow traders to better understand the implications of their trade before following through.
Furthermore, the government hopes to provide potential investors with facts. It will allow them to make decisions about their investments based on full data. This initiative is also aimed at highlighting the risks that exist in trader activities.
Will Israel’s new requirement hinder the country’s forex trading?
Some analysts and officials think that the ISA’s actions are an attempt to eliminate the Forex trading, but Israel refuses such a claim. David Malits, Founder & CEO of DM Communications, said that these restrictions are meant to help the investors as well as companies.
According to Malits, regulators’ focus on transparency, competition, and fairness is prevalent. ISA’s move may reduce concentration in the capital market and increase competition in banking. But the main driver behind this decision is likely part of an overall approach rather than an attempt to eliminate the industry.