Message from the Chairwoman
The Israel Securities Authority (ISA) operates under the Securities Law, which prescribes the role of the ISA to "protect the interests of the public investing in securities". Throughout its fifty-year history, the ISA has fulfilled this role professionally, actively, with dedication and determination, employing a balanced use of its tools of regulation, supervision and enforcement.
Since undertaking my position as the ISA chair about a year ago, I have engaged in a systematic process of articulating the ISA's strategic vision and objectives. This ongoing process included a thorough examination of the ISA's functions its approach to oversight, an analysis of investor and market needs, as well as the characteristics typical of successful capital markets abroad, and the special characteristics of Israel's economy.
Over the past year, we have held discussions with numerous market participants and outside experts, and have adopted the "open space" approach to create a unique encounter of the above with the ISA staff, to encourage free discussion and thought, and to generate new ideas and directions within the context of capital market regulation and reform.
This process has reinforced my views regarding the essential need to further develop Israel's public capital market as part and parcel of our national interest. This interest in market development relates to each and every Israeli citizen. A developed and efficient public capital drives the growth which is so vital to the Israeli economy. The public capital market enables efficient investment and therefore facilitates the achievement of two major objectives: the diversification of investment and savings opportunities for the public and the ability of business enterprises to raise capital to finance their activities and investments. The public capital market is designed first and foremost to serve the investing public and the local economy. It facilitates the efficient allocation of economic resources, promotes business activity and contributes to economic growth and employment. In addition, the public capital market provides Israeli companies with access to deep, readily accessible and cost-effective pools of capital for both equity and debt financing, and in so doing, enables these companies to launch and expand their activity, generate expertise, cultivate competitive advantage, diversify activity, enhance services, and develop high-quality products – the foundations on which they can enlarge their work force.
Simple logic, economic research and empirical evidence indicate that vigorous ties exist between a strong and vibrant local public capital market and a stable growth economy. Even a cursory glance around the world demonstrates a strong correlation between mature economies and well-developed, active public capital markets.
The plan we formulated is based on the principle that it is incumbent on the Israeli capital market to support economic development in Israel. This strategic goal will serve as a compass that will guide us when considering steps and measures to promote our market. They will be examined, inter alia, through the prism of whether and to what extent they contribute to the Israeli economy.
In articulating our goals for the coming years, we understand that the future has many challenges in store. Technological developments are changing consumer lifestyles in general, and present challenges, which beckon changes in how financial services are provided to investors.
In my view, a regulator should aim to anticipate the future in order to adjust the regulatory infrastructure to market changes and trends as well as to shifting global standards, so that the interests of the investing public are preserved and market oversight remains relevant. Regulation should address two overlapping needs – capital market development and the quality and scope of investor protection. The goal of simultaneously addressing these two needs can be achieved through a relentless pursuit of the values governing fair markets, through supervision and enforcement, and continuous, incessant and relentless work. Such work significantly contributes to reinforcing public confidence in the Israeli capital market, which in itself is a prerequisite for the market's vitality and strength.
In addition, it is my opinion that the Israeli capital market has reached a level of maturity and size which enables it to adopt behavioral norms in the form of self-regulation, similar to that practiced in the world's developed markets. I will therefore work to encourage self-regulation in the local market where and when possible.
It is important to underscore the fact that the capital market is part of a larger financial system. There is a need, therefore, to collaborate with government ministries and other financial regulators to drive the capital market to the next level to enable it to further develop and thrive.
I would like to thank the entire management team and the ISA's excellent staff, with which I have the privilege to work to achieve our common goals.