Israel Securities Authority Proposes Regulatory Relief to Licensees Providing Digital Investment Advice
Summary
- Background and Context – The ISA published a draft amendment to the 2016 Directive on licensing for service provision via technological means, updated in 2023. The directive regulates investment marketers, advisors, and portfolio managers operating through algorithmic systems and digital platforms.
- Scope of the Directive – The directive covers three stages of service: assessing client needs and entering agreements, formulating investment policies, and providing ongoing services. Licensees must fully understand algorithmic methodologies and bear full liability for technology-related damages.
- Proposed Amendment – Independent Trading Advice – The amendment aims to facilitate “independent trading advice,” including signal trading services, by removing the requirement for customers to have multiple execution service providers. Licensees may now provide execution access through a single provider, including their own or a related entity.
- Implications and Next Steps – The change reduces regulatory and technological barriers while preserving professional obligations. Public comments are open until February 4, 2026, and licensees should review operations and compliance frameworks to prepare for the updated rules.
In January 2026, the Israel Securities Authority (ISA) published a proposed amendment to the “Directive to licensees relating to service provision using technological means.” This directive, which originally came into effect in 2016 and was updated in 2023, was designed to align the provisions of the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 with the digital age. It regulates the activities of investment marketers, investment advisors, and portfolio managers operating through algorithmic systems and digital platforms.
The directive governs three main stages of service provision:
- Clarifying customers’ needs and entering into service agreements;
- Formulating an investment policy; and
- Providing ongoing services.
It also imposes enhanced professional obligations on licensees, including in-depth familiarity with the algorithmic methodology used and full liability for damages resulting from the use of the technology.
Proposed Amendment – Relief for “Independent Trading Advice”
The proposed amendment focuses on facilitating the provision of “independent trading advice,” including signal trading services—namely, the provision of ongoing investment recommendations to customers through digital means.
Until now, clause 30 of the directive allowed licensees to provide customers with access to execute recommended transactions directly through a signal trading service only if customers could execute such transactions through more than one service provider. This obligation was originally intended to encourage competition in the market. In practice, however, technological obstacles and substantial development costs made implementation difficult and impeded licensees’ ability to offer this service.
Accordingly, the ISA now proposes to cancel the requirement to present multiple execution service providers and to allow the provision of access for transaction execution even through a single service provider, including one operated by the licensee itself or a related entity.
The proposed change is intended to reduce regulatory and technological obstacles without derogating from the professional obligations and responsibilities imposed on licensees, while narrowing the gaps between current regulation and digital age realities.
Public comments on the draft amendment will be accepted until February 4, 2026.
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Adv. Andrey Yanai is a partner in our firm’s Regulation Department.
Adv. Avihai Tal is an associate in our firm’s Regulation Department.
Barnea Jaffa Lande’s Regulation Department is one of the leading practices in Israel. The team provides comprehensive advice across a range of regulatory areas relevant to our clients’ business activities. We support local and international corporations, investment funds, financial institutions, technology companies, industrial firms, and more in contending with complex and evolving regulation.