The Israeli Securities Authority ("ISA") has published a draft bill regarding the regulation of the activities of Broker-Dealers.
Brokerage activity in Israel, as well as the activity of dealers who do not operate as Trading Platforms (as defined in the Securities Law), is currently not regulated and this lack of regulation creates a significant regulatory gap.
The purpose of this Bill is to protect Israeli investors who use Broker-Dealer services, to increase the public's trust and to encourage competition between service providers. The Bill sets out a special law aimed at regulating the broker-dealer sector in Israel and subjecting the entities engaged in this activity to the supervision of the ISA. The draft law distinguishes between three types of activities: (1) brokerage activity; (2) dealer activity; and (3) the activity of a Stock Exchange member who carries out transactions in securities for himself only. It is proposed that each of these activities will require a dedicated license from the ISA. It is important to emphasize that in our understanding, the new licensing regime proposed by the Bill is not a substitute for the brokers obligation to apply to the Chairman of the ISA for a permit under section 49A of the Securities Law. To view the client updates with regard to Section 49A – click here.
Comments to the Bill may be submitted by September 26, 2018.
If enacted, the Bill will have significant consequences not only on Broker-Dealers, but also on various other service providers and those doing business with them. Please do not hesitate to contact us should you have any questions or require any clarification regarding the draft Bill and its implications.
To view the full wording of the draft Bill (in Hebrew) – click here.