The Bank of Israel establishes a reporting requirement on financial derivative transactions

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The Bank of Israel, to improve its ability to monitor and analyze developments in the foreign exchange and capital markets in Israel, requires detailed and quality data regarding foreign currency derivative, interest rate derivative, and index derivative transactions carried out by financial institutions.

 

As such, the Bank of Israel, under the authority of the Bank of Israel Law, 5770-2010, is publishing today two Orders, which will replace the Bank of Israel (Information regarding foreign currency derivative and short term debt instrument derivative transactions) Order, 5771-2011, which will be repealed with their publication. These Orders establish a reporting requirement regarding the execution of transactions in foreign currency derivatives, both for Israeli residents and for nonresidents:

 

-     Bank of Israel (Information from certain financial institutions regarding transactions in foreign currency derivatives, index derivatives, and interest rate derivatives) Order, 5776–2016

 

-     Bank of Israel (Information regarding transactions in foreign currency derivatives, index derivatives, and interest rate derivatives) Order, 5776–2016

 

The reporting requirement applies to every conversion transaction between Israeli currency and foreign currency, as well as every transaction involving Israeli currency in foreign currency derivatives, interest rate derivatives, and index derivatives. Reporting entities will be domestic banking corporations as well as various financial intermediaries (portfolio managers, Tel Aviv Stock Exchange members, etc.) and nonresidents, who have conducted a daily average of $15 million or more in transactions over the preceding 12 months.

 

As a result of the new Orders, the Bank of Israel is expected to receive quality and comprehensive statistical data, which will convey a broader picture on activity in the foreign exchange market and capital market.

 

This step is aimed at improving the Bank of Israel’s ability to achieve the goals of its monetary policy and its foreign currency policy.

 

Following please find a link to the Bank of Israel website with a comprehensive explanation of the Order, transaction reporting samples, and questions and answers related to reporting.