Israeli regulator warns Matach24 on algo-trading

trading

The Israel Securities Authority is examining if forex firm Matach24 is involved in unlicensed investment portfolio management.

The Israel Securities Authority (ISA) delivered a stern warning to forex company Matach24 in November, sources inform "Globes." The ISA instructed Matach24 that if it was engaged in algo-trading, trading using computer algorithms, including managing funds for others, then it was required to halt such activities immediately because this involves investment portfolio management, without the license required by law.

"Globes" has seen a letter sent by Elhanan Harmor, who heads the ISA's unit supervising licensees and coordinating on-going supervision over portfolio managers, investment managers and investment marketers, warning Matach24 not to continue such activities, which constitute a criminal offense.

The letter said, 'From the information included on your website (http://www.matach24.com/), it would apparently seem that Matach24, which operates the site, is providing services to customers that include trading for them with algorithms and cghoosing algo-trading investments. This activity, including managing funds for others in order to invest in the capital market, which is implemented by the company making investment decisions for its customers using algo-trading software, represents investment portfolio management operations under the law arranging involvement in investment consultancy, marketing investments and investment portfolio management."

Algorithm trading, known as algo-trading, is stock market trading based on computer software, which sends trading instructions generated by computer algorithms without human intervention. The algorithm initiates buy and sell instructions based on parameters of timing, price, negotiability and more without the involvement of human decision making.

The ISA made it clear that even if Matach24 ceases such activities now, this would not prevent enforcement measures for previous violations that were committed.

Matach24 CEO David Mesika said, "The company operates and work in accordance with the law. We are in contact with the Israel Securities Authority and if we are required to close down algo-trading activities, then we will comply."

The ISA said it does not respond to speculation, "In general, in accordance with the current legal situation, activities in trading forums can be conducted without supervision as long as it is carried out in accordance with the conditions set out in the past on the subject of trading forums while portfolio management operations cannot be conducted without a license. Among other things, the ISA examines whether trading forums that file an application for a license are conducting prohibited investment portfolio activities."

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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