As of February 10, 2024, new rules will apply to foreign entities that want to offer securities brokerage services via their marketers in Israel. The Israel Securities Authority promulgated these rules in December 2023, as part of its revision of the “Conditions of a General Permit under Section 49A of the Securities Law.” The revised version applies more lenient provisions than the draft version published in December 2022, after the ISA considered the public comments received on the draft.

According to the revision, entities subject to dedicated and appropriate supervision in the US, the EU, the UK, or Switzerland and that want to offer foreign brokerage services in Israel will bear supervisory responsibility for the activities of their marketers (who are not employees of the brokers) in Israel, if those marketers do not hold a permit to offer brokerage services in Israel.

The New Rules

The foreign broker must ensure that the marketer is not involved in receiving and transmitting instructions for the purpose of executing transactions for investors, in otherwise carrying out instructions to execute transactions on behalf of investors, or in buying or selling securities for the purpose of carrying out investors’ instructions.

1. The foreign broker must ensure that the marketer is not involved in receiving and transmitting instructions for the purpose of executing transactions for investors, in otherwise carrying out instructions to execute transactions on behalf of investors, or in buying or selling securities for the purpose of carrying out investors’ instructions.
2. The foreign broker must ensure the marketer is in no way holding investors’ funds or assets or involved in the handling or transfer of investors’ funds or assets.
3. The foreign broker must supervise and control the marketer, including verifying in advance that the marketer is qualified to communicate with investors, controlling the information that the marketer provides to customers, and controlling compliance with the aforesaid conditions.

4. The foreign broker must maintain an updated list of external parties acting on its behalf, publish this list on its marketing website targeting investors in Israel, and forward the list to the ISA before receiving the permit and after any updates are made to the list.

These rules will apply solely to marketers who communicate with investors in Israel. (For example, the rules will not apply if a marketer merely forwards details of potential customers without communicating with them at all.)

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