On 27 December 2018, the Israel Securities Authority (the ISA) published a general permit for the offering of securities trading services (brokerage services) via a non-Israeli stock exchange (an activity otherwise prohibited under section 49A of the Israeli Securities Law, 1968).
The permit provided that permission would be granted for such activity provided the conditions therein were met – meaning, and contrary to certain other exemptions in the securities law field which apply automatically if the appropriate conditions apply, that even an entity in compliance with the conditions would nevertheless need to apply for a specific permit.
The permit referred to three types of entities - foreign stock exchanges, entities wishing to provide such services to Sophisticated Investors (as defined in the Securities Law) only, and entities meeting certain criteria which would be permitted to offer such services to non-Sophisticated Investors as well.
The ISA has now published a revised version of the general permit, dated 6 June 2019. The key change is that the second type of entity – a non-stock exchange entity wishing to provide securities trading services to Sophisticated Investors only – will now be automatically permitted to do so, and will not be required to apply for a specific permit.
Securities trading services via a non-Israeli stock exchange may now accordingly be offered to Sophisticated Investors without the need for any approach to the ISA.
The disclosure requirement with regard to such type of activity will nevertheless remain – namely that whenever advising a Sophisticated Investor counterparty as to the fact that it is permitted to provide the services, such an entity must clearly state that such activity is not supervised by the ISA, and that the existence of the permit does not constitute an opinion as to the nature of the service provided by the permit holder nor as to the risks involved therein.
We have noted in recent months that the need to obtain a specific permit under section 49A has generated much activity among foreign entities active in the Israel market; this news should therefore constitute a positive development for those whose target market comprises Sophisticated Investors.