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ISA – New Obligations for Foreign Brokerage Service Providers

The Israel Securities Authority is looking to toughen the conditions under which it will grant a permit to entities applying to offer foreign brokerage services in Israel. This includes obligating foreign brokers to bear supervisory responsibility for the activities of marketers of their trading services in Israel (who are not employees of the broker).


Currently, entities offering foreign brokerage services can market their services in Israel according to a general permit from the Israel Securities Authority (ISA), by virtue of the provisions of section 49A of the Securities Law. The offering of brokerage services to the general public in Israel (offerings other than only to sophisticated investors) is solely permissible through banking corporations, non-bank TASE members, or entities subject to specific and appropriate supervision in the United States, the European Union, Great Britain, or Switzerland.


These entities must declare that they fulfill all requisite criteria to receive a permit from the ISA for the purpose of their activities. The ISA is also allowing investment counselors or marketers to offer these entities’ services, provided they receive a permit from the ISA for this purpose.


Supervision of Marketers


In the proposed amendment, the ISA is seeking to add a declaration to the conditions to obtaining a permit, whereby if an external marketer performs the broker’s marketing activities in Israel, the broker must be responsible for supervising the marketer as follows:


  1. A permit holder (foreign broker) must supervise its marketer and ensure it is not violating the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law or the Securities Law during the marketer’s engagements with Israeli investors relating to the permit holder’s services, and that the marketer is not providing any misleading details in relation thereto.
  2. A permit holder must supervise and examine every engagement the marketer enters into with Israeli investors relating to the permit holder’s services and issue its prior written approval for all marketing materials the marketer wants to use in this regard.
  3. A permit holder must conduct due diligence examinations of its current marketers, and when selecting new marketers. (For example, it must examine the qualifications of the marketers and their employees for the purpose of marketing the permit holder’s services).
  4. A permit holder must ensure its marketers are not in any way involved in Israeli customers’ processes of transmitting purchase and sale instructions and are not involved in any transfers of Israeli customers’ funds or assets.
  5. Foreign brokers must forward the list of marketers operating on their behalf, including their particulars, prior to obtaining a permit. Permit holders must also forward such a list prior to initiating activities with any new marketer and an updated list to the ISA after every update.
  6. A permit holder must publish the names of the marketers it is working with and their particulars prominently on its website targeting Israeli investors and must provide investors with the requisite disclosures pursuant to the conditions of its general permit.
  7. The draft amendment is looking to add a provision whereby permit holders must take measures to identify any potential conflicts of interest in their marketers’ activities, as well as disclose any conflicts of interest on its marketing website targeting Israelis and the restrictions applying by virtue thereof.
  8. A permit holder must take all reasonable measures to ensure that parties not included on the list it issues to the ISA do not contact Israeli investors with the goal of offering the permit holder’s services.


Public comments to the draft amendment will be accepted until December 27, 2022.




Barnea Jaffe Lande provides legal advice to foreign and local brokerage service providers and other players in the investment field, pertaining to licensing, compliance, and other issues.



Adv. Michal Koren is an associate in the Capital Markets Department.


Tags: Foreign Brokerage | Securities Law