Regulations under the Securities Consultancy Law were approved today by the Knesset Finance Committee. Capital market players are weighing the option of petitioning the High Court of Justice against the various regulations.
The Arrangement of Occupation in Investment Consultancy and Investment Portfolio Management Law (Consultancy Law) was legislated as early as the summer of 1995, but will only now take force, with the approval of all regulations accompanying the law and which infuse it with content.
Two aspects of these regulations are arousing great indignation among capital market players: the minimal own capital requirement set for a portfolio manager; and the licensing requirements that will have to be met by investment managers and consultants.
Minimal own capital, once the regulations take effect, has been set at NIS 300,000. In addition, portfolio managers must take out minimal annual bench insurance of $4,500 and pay annual fees to the Securities Authority.
The own capital requirements will be very burdensome to a large proportion of portfolio managers, some of whom are thinking of petitioning the High Court of Justice on the grounds that the requirement contravenes the Basic Law: Freedom of Occupation.
Other legal requirements that have aroused the ire of market players relate to licensing. The sub-committee for capital market affairs, headed by MK Sylvan Shalom, reduced the original seven-exam requirement to five: statistics and financing, accountancy, economics, securities laws and professional ethics, and securities analysis.
Anyone dealing in the capital market for less than seven years (starting from date of passage of the regulations), must pass those examinations. Dealers with greater seniority will only need to be examined in professional ethics.
What is mainly feared is that the Securities Authority examinations will make the profession a closed shop, being a “new version of the examinations of the Institute of Certified Public Accountants in Israel”, that is to say, examinations with a particularly high failure rate. Thus failure, for persons engaging in the profession only five or six years, would mean loss of their jobs.