The legal requirement of licensing applies both to individuals and entities engaged in the above-mentioned activities. Individual investment advisors can either be self-employed or employees of a licensed advisory firm or a [commercial] banking corporation. In contrast, portfolio managers are entitled to work solely as employees of licensed portfolio management firms.
Licensing of Individuals
Individuals interested in engaging in a licensed investment profession must meet the following criteria:
A. At least 18 years of age;
B. Citizen or resident of Israel;
C. Has not been convicted of a crime (among the crimes stipulated in the "the Investment Advising Law");
D. Successfully completed the professional exams administered by the ISA in the following subjects:
1. Securities law and professional ethics;
3. Statistics and finance;
5. Securities and financial instrument analysis;
6. Portfolio management (for portfolio manager applicants only).
* Special Test Accommodations – click here.
- E. Completed an internship (six months for investment advisors and marketing agents/nine months for portfolio managers);
F. The applicant must secure professional indemnity insurance for the minimum stipulated in the regulations
* Notwithstanding the conditions mentioned above, in special circumstances the ISA is authorized to grant exemption from examinations and internships under section 8A of the Law. To view the Exemption Criteria – click here
The ISA reserves the right to withhold a license from an individual that meets all the above criteria, if it believes that circumstances exist, which render the applicant unfit to be licensed (fit and proper tests) or if a criminal investigation is being conducted against the applicant.
Licensing of corporations
Only entities legally established in Israel are entitled to obtain a license. Applicant entities must comply with the following requirements:
- A. It must undertake that it will only employ licensed individuals for the purpose of rendering investment advice, investment marketing or portfolio management services.
- B. It must undertake that no individual that, to the best of the company's knowledge, has been convicted of one of the crimes stipulated in the law, or whose license has been either suspended or revoked, serve as an executive or director in it.
- C. It fulfills minimum capital requirements as stipulated in the regulation.
- D. It has secured insurance, bank guarantee or deposit for the sum stipulated in the regulation.
E. An additional requirement is placed on portfolio management firms. These firms are prohibited from engaging in underwriting and can only engage in investment advice, investment marketing, portfolio management and ancillary activities.
Foreign Dealers Register
No license is required by a foreign dealer in providing services for clients of a licensed body upon the fulfilment of the conditions determined by the law. A foreign dealer and a licensed body who wish to operate in Israel are required to register to the ISA's Register of Foreign Dealers. A request for registration to the Register of Foreign Dealers should be sent to: firstname.lastname@example.org
- The ISA is entitled to withhold a license to a company fulfilling all of the above requirements if it believes that circumstances exist, which render the applicant unfit to be licensed (fit and proper tests), or such circumstances exist with regard to a director, executive, or controlling shareholder of the company, or if a criminal investigation is being conducted against the applicant.