Bank of Israel Derivatives Reporting

Understand, validate and oversee Bank of Israel derivatives reporting with confidence

The Bank of Israel’s derivatives reporting framework was introduced to improve transparency and monitor systemic risk of financial derivative transactions and strengthen the Bank’s ability to monitor developments in the foreign exchange and capital markets in Israel. The Bank of Israel requires detailed and high-quality data regarding all OTC derivatives, specifically foreign exchange and interest rates, that have an ISL component s carried out by financial institutions.

For firms in scope, the challenge is not simply submitting transaction reports to the Bank of Israel. It is demonstrating that reportable transactions have been identified correctly, that threshold tests have been applied properly, that daily and monthly reporting requirements have been handled accurately, and that the control framework around reporting can withstand scrutiny.

What is Bank of Israel derivatives reporting?

Bank of Israel derivatives reporting refers to the local reporting obligation on specified financial derivative transactions established by the Bank of Israel through its reporting order and related Q&A materials. The framework is intended to improve the Bank’s ability to monitor and analyse developments in the relevant markets using detailed transaction data.

The operational guidance published by the Bank of Israel distinguishes between daily and monthly reporting and between foreign currency derivatives on the one hand and index and interest rate derivatives on the other.

Who is required to report under Bank of Israel derivatives reporting?

According to the Bank of Israel Q&A, the reporting requirement applies to:

• a portfolio manager

• a Tel Aviv Stock Exchange member

• a financial intermediary or non-resident

• a foreign bank regarding its branches outside Israel

This applies where the relevant person carried out, whether on its own behalf or for others, foreign currency derivative trades in the preceding 12 months at an average daily amount of at least $15 million.

That means the regime is threshold-based and requires firms to understand not only whether they are active in the relevant products, but whether they have crossed the reporting threshold in a way that brings them into scope.

Scope and Israeli nexus

The Bank of Israel framework is linked to financial derivative activity relevant to the Israeli market and applies across foreign currency and interest rate derivatives that have an ISL component.  The Q&A materials also distinguish between resident and nonresident reporting positions and address foreign bank branches outside Israel.

For firms operating across locations or through branches, that makes threshold monitoring, entity mapping and reporting-entity logic especially important. In practice, firms need to be confident that they can apply the threshold and product perimeter consistently over time, rather than only at the point of submission.

What must be reported?

The Bank of Israel Q&A explains that:

• daily reporting includes only Part A, with Part A(1) for foreign currency derivatives and Part A(2) for index and interest rate derivatives

• monthly reporting includes both Part A and Part B

• monthly Part A includes transactions executed during the month, whether or not they were closed out

• monthly Part B includes the value of transactions that have not yet been exercised or reached termination date

In practice, that means firms need to control not only transaction capture, but also correct segmentation of product types and the distinction between current-period activity and outstanding positions.

Reporting deadlines

The operational framework distinguishes between daily and monthly reporting obligations, with different content requirements for each.  In addition, firms are required to submit a daily report regardless if any trades or lifecycle events occurred on the given day.  This  means reporting entities must have controls to ensure they are able to submit both populated and empty reports.

The practical point is that timing under this regime is tied to the reporting cycle itself, which means firms need robust processes not only for daily submissions but also for the monthly position-style reporting element.

Is Bank of Israel derivatives reporting single-sided, dual-sided or delegated?

Bank of Israel reporting is a dual-sided regime, meaning if both entities are in-scope then they must both submit their own reports.  This means that firms must have robust controls and checks in place to ensure that all reportable transactions have been reported on time and accurately.

Are there Bank of Israel reporting exemptions or reliefs?

The most important perimeter feature in the Bank of Israel framework is the $15 million average daily amount threshold over the preceding 12 months. In practice, that threshold acts as a major scope filter and must be monitored carefully.

Only transactions denominated in ILS must be reported, all other transactions denominated in any other currency are exempt from reporting under the Bank of Israel reporting framework.

Unlike many other regimes, FX Spot transactions are eligible for reporting.  This includes both standalone FX Spots as well as those Spots that have been executed as the near leg of an FX swap

Consequences of non-compliance

Bank of Israel reporting failures create regulatory, operational and reputational risk, particularly where firms cannot evidence control over threshold monitoring, product classification, daily / monthly reporting structure and submission quality. The Bank introduced the reporting requirement specifically to obtain detailed and high-quality data, which means weak data quality cuts directly against the purpose of the regime.

For firms in scope, the expectation is clear: reporting must be accurate, timely within the applicable cycle and supported by a defensible control framework.

How En:ACT helps with Bank of Israel derivatives reporting oversight

En:ACT helps firms strengthen control over their Bank of Israel reporting obligations by ingesting raw transaction data from any source system, performing books and records reconciliation, and assessing 100% of transactions and fields against the applicable local reporting rules.

Using transparent, regulator-linked logic, the platform identifies:

• threshold and scope issues

• field-level errors

• cross-field inconsistencies

• product classification problems

• daily / monthly reporting gaps

• reporting anomalies

Each identified issue is linked directly to the specific Bank of Israel reporting rule breached, giving firms a clear view of what is wrong, why it matters and where remediation is required.

En:ACT also ensures rules are kept up to date to reflect developments across:

• regulatory text

• regulator guidance

• consultation papers

• relevant industry papers

For Bank of Israel reporting specifically, that means firms benefit from rule coverage maintained in line with the reporting order and the Bank’s published Q&A materials.

Specialist Bank of Israel expertise from the Novatus Intelligence team

Our Bank of Israel capability is supported by specialists within the Novatus Intelligence team, including SMEs with backgrounds across banking, asset management, product and regulation.

For this regime specifically, that means access to specialists who understand threshold-based local reporting, derivative product classification and the operational issues firms face in maintaining reporting quality under the Bank of Israel framework.

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Common Bank of Israel reporting challenges

Some of the most common Bank of Israel reporting issues include:

• poor threshold monitoring

• incorrect product categorisation

• weak distinction between daily and monthly reporting content

• incomplete treatment of open positions

• weak control over cross-border branch activity

• poor source-to-report reconciliation

In many cases, the issue is not one bad field. It is a mismatch between the transaction population monitored for threshold purposes, the product classification applied and the final report file produced for the Bank of Israel.

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Why firms choose En:ACT for Bank of Israel reporting oversight

Firms use En:ACT because it gives them more than a validation tool. It provides a control framework around Bank of Israel derivatives reporting.

With En:ACT, firms can:

• test reporting quality against transparent rule logic

• reconcile source data to reported data

• identify issues before they become regulatory problems

• evidence threshold and product-classification governance

• benchmark reporting quality over time

• prepare for change with greater confidence

The result is stronger reporting assurance, better governance and a clearer line of sight from raw transaction data to regulatory submission quality.

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