Update of the general authorization to provide securities trading services


On December 27, 2018, the Israel Securities Authority (the ISA) issued a general authorization for the offering of securities trading services (brokerage services) through a non-Israeli stock exchange (an activity otherwise prohibited under Section 49A of the Israeli Securities Law of 1968).

The permit provided that permission would be granted for such activity provided that the conditions set out therein were met – which means, and unlike some other securities law exemptions which apply automatically if appropriate conditions apply, that even an entity complying with the conditions must nevertheless apply for specific authorization.

The permit referred to three types of entities – foreign stock exchanges, entities wishing to provide such services to sophisticated investors (as defined in the securities law) only, and entities meeting certain criteria that would be permitted to offer these services to non-sophisticated investors as well.

The ISA has now issued a revised General Authorization, dated June 6, 2019. The key change is that the second type of entity – a non-exchange entity wishing to provide securities trading services to sophisticated investors only – will now automatically be allowed to do so and will not be required to apply for a specific permit.

Securities trading services via a non-Israeli stock exchange can therefore now be offered to sophisticated investors without the need to approach the ISA.

The disclosure requirement regarding this type of activity will nevertheless remain – namely that whenever it advises a sophisticated investor counterparty that it is authorized to provide the services, that entity must clearly indicate that this activity is not supervised by the ISA , and that the existence of the authorization does not constitute an opinion on the nature of the service provided by the holder of the authorization or on the risks incurred by the latter.

We have noted in recent months that the need to obtain a specific permit under Section 49A has generated a lot of activity among foreign entities active in the Israeli market; this news should therefore be a positive development for those whose target market is made up of sophisticated investors.


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