The Bank of Israel cancels its sale of NIS/$ options

18.8.2006
 
The Bank of Israel cancels its sale of NIS/$ options
 
The Bank of Israel has announced that from the beginning of September 2006 it will no longer conduct auctions for the sale of NIS/$ options. The Bank began selling NIS/$ options through auctions in 1989, and today six-month put and call options are sold.
At first, the Bank of Israel sold options on the NIS exchange rate against the dollar as a way of developing Israel's derivatives market. Over the years, these options provided a constant and certain supply to the market, serving as a benchmark for other options in the capital market.
In a recent examination by the Bank of Israel Monetary Department, it appears that the Bank of Israel's NIS/$ options had achieved their goal of developing the exchange-rate derivatives market and that there was no more need for a benchmark after the market has developed considerably in recent years. As is well known, option transactions are conducted in large volumes both on the stock exchange and over the counter in the banking system. The short-term (up to three month) options market is particularly well developed while for the longer terms, trade also reaches high volumes particularly during times of uncertainty in the economy.