Companies Seeking to Provide Brokerage Services are Required to File a Permit Application by May 30, 2019

With a view to reducing risks to the investing public, as well as to facilitating new entrants into the Israeli brokerage market ahead of the introduction of direct regulation for broker-dealer activity in Israel, the Israel Securities Authority recently published its policy for granting permits for the provision of securities brokerage services through a securities dealing system managed outside of Israel and not authorized as a stock exchange in Israel.

The general permit requirements, made under section 49A of the Securities Law, deal differently with exchanges, regulated entities, and unregulated entities who wish to offer brokerage.

The requirement for a permit is in addition to, and does not replace, any other legal conditions. For example, it does not obviate the need for an investment advice license where investment advice is offered, nor the need for a permit to issue a prospectus where a public offer of securities is made.

There is no firm commitment from the ISA on how long it will take to assess applications, but applicants who submit a permit application on or before May 30, 2019, may continue to offer brokerage under the previous ISA regime until receiving a decision on their application.

The identities of permit-holding entities will be published on the ISA’s website.

Once the ISA issues a permit, on the basis of an applicant’s declaration that it complies with the general permit requirements, the permit holder will be required to repeat such declaration every three years.

If an entity ceases to meet any of the general permit requirements, it will have to make an immediate report to the ISA. The ISA Chairman may also amend the general permit requirements from time to time by publishing a notice on the ISA’s website, which will take effect 60 days after publication.

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