The Capital Market Authority Announces List of Unauthorized Entities and Platforms Engaging in Foreign Exchange Trading in Palestine

SadaNews - The Capital Market Authority announced a comprehensive update to the list of unauthorized entities and platforms that engage in trading activities in foreign exchange (Forex) markets in Palestine.

The authority warned the public in a statement that the updated list includes dozens of platforms and marketers, and dealing with them poses a high risk that could expose your funds to fraud and loss.

The authority also confirmed that legal activities are strictly limited to the four companies licensed by it, and any other entity is considered a violation of the law and is not subject to the authority's oversight.

According to the Capital Market Authority, the licensed entities are: the United Securities Company, Windsor Brokers, CFI Palestine, and the International Securities Company.

For the list of unauthorized entities, please click here.

The foreign exchange market (Forex) allows participants such as banks, companies, and individuals to buy or sell currencies for hedging and speculative purposes. The foreign exchange market (Forex) is considered the largest unregulated market in the world, comprising banks, corporations, central banks, investment management firms, hedge funds, brokers, and investors.

The foreign exchange market (Forex) is characterized by factors that make it an attractive market for the following reasons:

High liquidity, the foreign exchange market (Forex) is one of the largest and most liquid markets in the world, this high liquidity can be attractive to traders who want to execute trades efficiently and at tight spread.

Accessibility, the foreign exchange market (Forex) is available to traders worldwide and operates 24 hours a day, 5 days a week, providing a lot of flexibility for those who wish to trade currencies online.

Trading with leverage, traders in the foreign exchange market (Forex) can use leverage to control larger trading positions with less capital when trading currencies, which can lead to amplified profits if currency prices move in their favor. However, it is essential to remember that leverage can also lead to amplified losses. Therefore, leverage should always be used cautiously.

Who regulates the foreign exchange market (Forex)?

The foreign exchange market (Forex) is a decentralized global market, and there is no single regulatory body overseeing trading activity within this market. Instead, regulatory bodies in countries are responsible for regulating foreign currency trading within their jurisdictions. This includes supervising the behavior of market participants and ensuring that all providers of foreign exchange services comply with strict standards. Consequently, the Palestinian Capital Market Authority is the entity that licenses, regulates and oversees this type of activity in Palestine.

The Law No. (17) of 2009 allows securities companies to be one of the entities licensed by the Palestinian Capital Market Authority to operate in foreign exchanges according to the provisions of the Capital Market Authority Law and the Securities Law.

For the purpose of regulating this type of activity, and in line with the Authority's vision to achieve its goals of protecting investors' rights and organizing and maintaining stability in the working environment of non-banking financial sectors, especially the informal ones, and in light of the high risks associated with this activity that can harm investors' interests in trading operations or dealing with illegal and unofficial platforms, exposing citizens to fraud cases that could jeopardize the interests of those involved due to ignorance or haste in achieving financial gains, the authority has decided to organize the activity through a series of measures, which followed the following steps:

Preparing a policy paper highlighting the importance of regulating the foreign exchange market, specifically the unregulated ones or what is called (Forex).

Issuing a decision by the Palestinian Cabinet No. (07/230/18/م.و/م.ا) for the year 2023 regarding the companies' engagement with foreign exchanges.

Issuing instructions for dealing with foreign exchange companies in unregulated foreign exchanges No. (1) for the year 2024.

In parallel with preparing the legal environment, and as a precedent recorded for the Palestinian Capital Market Authority regionally, the authority adopted a secure and effective electronic monitoring system for the dealings of licensed securities companies and their investors and financial movements. The electronic system that the authority adopted for this purpose was carried out through a specialized provider, enabling the regulatory system to ensure compliance of licensed companies with the instructions and contributed to checking compliance of operators and detecting any violations.

One of the most significant risks of trading in unregulated foreign exchanges (Forex) is the loss of invested capital for the following reasons:

Using leverage in an unbalanced manner.

Not adopting a clear risk management policy that includes setting a stop-loss and profit-taking order, as they are fundamental components for any successful trader. The stop-loss order is a guarantee to prevent losing trades from resulting in more uncalculated losses.

Random trading without any plan, especially for beginners, where these individuals tend to view the trading process as an adventure or gambling, without considering the reasons for entering or exiting trades.