30 December 2018
22 Tevet 5779
The Israel Securities Authority has published the conditions for the general permit to offer trading services in securities that are not listed on the Stock Exchange in Israel
The Israel Securities Authority today published the conditions for the general permit pursuant to Section 49A of the Securities Law, for the purposes of an offer of trading services in securities through a stock exchange that does not have a license in Israel. The Securities Law states that this activity is prohibited to investors in Israel unless a permit has been granted for it by the ISA Chairman. The obligation to obtain a permit under the Section applies to foreign stock exchanges soliciting Israeli investors and to entities acting on their behalf or acting independently, such as various brokers, which offer trading in foreign securities. The permit also distinguishes between the types of customers being solicited and distinguishes between qualified investors and the public at large.
The general permit to offer trading on foreign stock exchanges is intended to reduce the many risks in unsupervised activities, such as lobbying investors in Israel to purchase securities on foreign exchanges by independent entities which are currently unregulated.
At the same time, the ISA Chairman, Ms. Anat Guetta, has decided to promote legislation to regulate brokerage activities in Israel currently being conducted in relation to the Tel Aviv Stock Exchange and stock exchanges abroad. Comprehensive and detailed regulation is required on the matter which will include licensing of activities, rules determining how it should be done, and ISA supervisory and enforcement powers in the brokerage sector.
The general permit sets out threshold requirements for entities seeking to offer trading on stock exchanges abroad to the general public. The general permit distinguishes between the types of activities, the entities offering them, and the audience at which they are directed. With regard to entities seeking to appeal to the general public, a permit will be granted only to entities whose reliability and skill may be relied upon in light of their status as banking corporations, as non-bank stock exchange members, as entities under specific supervision in the United States and the European Union.
Insofar as the activities of foreign stock exchanges in Israel are concerned, the general permit adopts the conditions included in a number of preliminary publications by the ISA on the matter, which also do not allow a stock exchange that does not have a license in Israel to solicit the general public.
The permit will be effective in another six months. entities currently active must submit an application to the ISA as soon as possible and no later than 30 April 2019.