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Banking Regulations and Compliance in Israel: A Comprehensive Guide

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The Bank of Israel has implemented a mandatory derivative reporting requirement for over-the-counter derivatives on FX and rates, effective since January 1, 2017. This follows the introduction of its first reporting regime in July 2011.

Extra-Territoriality and Reportable Asset Classes

Israel’s reporting regime stands out in two key areas:

  • Extra-territoriality: Foreign firms are required to report, with possible financial sanctions for non-compliance.
  • Reportable asset classes: The regime includes FX spot, a non-traditional derivative instrument.

Reporting Obligation and Firms Required to Report

The reporting obligation began on January 1, 2017, for all reporting firms. Firms could apply for an extension until November 30, 2016.

Eligible Firms

  • Israeli banks
  • Israeli financial institutions above the threshold
  • All non-Israeli firms above the threshold

The volume threshold concerns average daily notional executed over a rolling lookback period of one year. If the average daily notional exceeds USD 15 million, firms must report until a year has passed with the average daily notional threshold not being met.

Reportable Derivatives Instruments

Derivatives from FX (including FX spot) and Rates that are shekel-denominated, involve the shekel, or reference a shekel yield or interest rate must be reported. These instruments include:

  • FX spot
  • FX forwards
  • FX swaps
  • FX contracts for difference (CFDs)/spread bets
  • Inflation swaps
  • Forward rate agreements (FRAs)
  • Interest rate swaps (IRS)
  • Coupon swaps
  • Basis swaps
  • Cross-currency swaps
  • FX options (deliverable and non-deliverable)
  • Inflation options
  • Rates options, caps, and floors

Reporting Requirements

Reporting firms must submit monthly reports of all reportable transactions executed in that month, as well as all outstanding transactions and their valuations by the next business day.

Regulatory Compliance

Regulatory compliance can be a challenge, but with expertise and trusted data accuracy, it’s possible to turn regulation into an opportunity. Our G20 Reporting solution can help you navigate Bank of Israel reporting requirements.

For more information or assistance, contact our sales team.