On August 2, 2015, the Israeli Securities Authority (the "ISA") published a warning to the public in regard to the risks involved in computerized investment management ("robot trading", "Algo Trading" etc.), which originate from projects relating to offerings, often through the Internet or the e-mail, in order to persuade the public to make investments in the capital market.
This warning is added to a previous warning issued by the ISA on 11 June 2014 regarding the risks associated with unregulated investments.
According to the ISA’s clarification, a trading platform management license or investment advice or marketing activity license is not suitable for the type of computerized investment management and in order to comply with the supervisory conditions, a company is required to hold a portfolio management license from the ISA.
Entities which perform computerized investment management activities without a portfolio management license will ostensibly be acting in violation of the law, and accordingly, any entity which is connected with them might be subject to a legal exposure.
The following entities may wish to explore the impact of the ISA's above position:
- Trading platforms which allow companies to conduct Robot trading / Algo Trading through them.
- Entities with holdings in Robot trading / Algo Trading or entities which consider investing in similar companies.
- Financial institutions that allow trades in securities trading, where Robot trading / Algo Trading can act as a legal representatives.
For the full warning of the ISA – click here