The Israel Securities Authority proposes the legislativeregulation of the activities of companies that trade financialassets such as basket certificates and structured deposits, andthat such companies be subjected to the provisions of the JointInvestment Trusts Law In recent years, there has been an increase in the activity ofcompanies whose shares are traded on the Israeli stock exchange andwhose main activity is the trading of securities and financialproducts. Most of this activity involves the trading of basketcertificates, a sector in which the assets total tens of billionsof shekels, but also involves other financial products such assecuritized deposits and corporate debentures, structured depositsand others. A significant portion of this activity is carried out throughprivate companies that have issued debentures on the stock exchangeand are subject only to the disclosure requirements that theSecurities Law, 1968 (the "SecuritiesLaw"), imposes on reporting entities, and they arenot subject to the provisions of the Joint Investments Trusts Law,1994 (the "Joint Investment TrustsLaw"), since they are not incorporated as"mutual funds." This is why the Israel SecuritiesAuthority wishes to determine what is the appropriate regulatoryframework for the supervision of the activities of such companies,which frequently expose the investing public to complex financialproducts that lack transparency and involve a high degree of risk.The Authority's position is that the Securities Law provisionsare more appropriate for real companies, and less appropriate forcompanies that trade financial assets. An inter-ministerial committee appointed by the Authority'sChairman, Moshe Tery, has submitted its recommendations, which aredivided generally into two aspects: Arrangement of the regulatory framework to apply tocompanies that trade financial assets, through a substantive testregarding the manner of their operations – It hasbeen proposed that the Joint Investment Trusts Law be amended sothat it would apply to companies whose purpose is joint investment,holding, ownership or trading of securities, even if such companiesare not incorporated as mutual funds. The definition of a securitywill be changed such that it will also include options, futurescontracts, derivatives and participation certificates and "anyeconomic interest in a security" (a basket clause which issubject to purposive interpretation). The Israel SecuritiesAuthority will have the power to exempt specific entities...
Banking & Financial Newsletter - The Legislative Regulation Of The Activities Of Companies That Trade Financial Assets
|Author:||Mr Gadi Ouzan|
|Profession:||Shibolet & Co.|
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