The Broker-Dealer Reform Moves Forward
16 July 2025
On July 9, 2025, a Bill for the Regulation of the Engagement in Securities Trading Services, 2025 (the “Bill“) was submitted to the Knesset, following the publication of a memorandum for public comments in October 2024 (the “Memorandum“).
The Bill is intended to establish, for the first time, a regulatory framework for the provision of brokerage services to clients in Israel.
The Bill is expected to significantly impact a broad range of service providers which provide securities trading services to clients in Israel. Most notably, it introduces a licensing requirement for entities offering brokerage or dealer services and places them under a comprehensive supervisory regime
The Bill introduces several key changes compared to the previous Memorandum, including:
1. A revised definition for “Brokerage”, which applies to receipt and transfer, or execution, of trading orders.
2. A revised definition for “Securities”, which now includes listed or publicly offered securities, as well as listed and over-the-counter (OTC) derivatives.
3. A new licensing exemption for broker-dealers that are licensed outside of Israel, provided they offer services exclusively to “Sophisticated Institutional Investors”(meaning investors listed in the First Schedule of the Securities Law, excluding high-net-worth individuals or corporations).
The Bill entails opportunities as well: (a) it establishes a framework for permitting the operation of trading systems with special characteristics, without holding an “exchange” license; (b) it permits licensees to engage in ancillary activities (that would otherwise require separate licensing) such as currency conversion services, provision of credit, accepting cash deposits and holding assets in custody.
We invite brokers, dealers and other entities that take part in the execution of transactions in Securities for investors in Israel to consult with us regarding the potential implications of the Bill and the appropriate measures for addressing them.
Our team specializes in advising and representing global brokers and dealers in connection with their activities in Israel, including in regulatory proceedings before the Israel Securities Authority and in Committees of the Knesset.
We remain at your disposal for any matter concerning the Bill.
