The Israel Securities Authority has proposed amending the Joint Investments Trust Law (5754-1994) to allow marketing of foreign mutual funds in Israel. Up until now, local investors have been able to buy shares in mutual funds registered overseas, but the law required the funds to operate in Israel as Israeli funds. This requirement prevented the development of a market for foreign mutual funds in Israel.
The Securities Authority said that the amendment would provide investors with better access to foreign markets, and could also increase competition between funds in Israel. Local funds, particularly those owned by banks, currently dominate the Israeli mutual funds market.
Under the proposal, the Securities Authority will rely on supervision of foreign mutual funds in their countries of origin, and will not supervise them. Only mutual funds from countries where the Securities Authority has confidence in domestic supervision will be approved for marketing in Israel.
Foreign mutual funds marketed in Israel must have managers with at least five years experience in mutual fund management. Only funds that have been authorized for marketing in their country of origin and are under regular supervision of the responsible authorities there will be approved for marketing in Israel.
The manager of a fund marketed in Israel must appoint a representative in Israel, who will serve as a liaison between the manager and investors in Israel. Managers must submit an appendix in Hebrew to the Securities Authority, stating their funds’ investment policy, and providing other information.
Under the proposal, foreign funds marketed in Israel will resemble Israeli funds in their principal characteristics. For example, they will be allowed holdings solely in marketable securities, their assets will be calculated daily according to the market prices, and they will be required to disperse their assets, in order to prevent unfair competition with funds managed in Israel.
Published by Globes [online] - www.globes.co.il - on August 23, 2004