Yesterday, the Knesset Finance Committee sub-committee on capital markets, insurance and savings approved amendment 15 to the Joint Investment Trust Law, enabling foreign funds to distribute products in the Israeli market.
The amendment has not yet come into force, however, as the Knesset plenum has yet to pass the amendment and the regulations setting out the details of the arrangement. The Israel Securities Authority, which promoted the change, estimates that the amendment will not come into force before 2015.
All the same, subcommittee chairman MK Yitzhak Cohen (Shas) said that it was "a historic day for the Israeli capital market," adding, "For the first time, major overseas financial bodies, banks and funds, will be able to enter the Israeli market, and this will boost competition, to the advantage of the average Israeli investor, who will now have a greater choice of investment products and will benefit from a substantial fall in the cost of investment."
Israel Securities Authority chairman Prof. Shmuel Hauser said, "The amendment to the law will enable the Israeli public to diversify its investment portfolio and lower the cost of investment, and will mean greater competition in the industry."
Alongside all these welcoming voices, there were also those who expressed fears over the move, chief among them representatives of the Israel Association of Mutual Funds and the Federation of Israeli Chambers of Commerce, who argued that the amendment still did not sufficiently protect Israeli investors. In this context, Adv. Avraham Well said on behalf of the Federation of Israeli Chambers of Commerce that the operator of a foreign fund bore no responsibility towards an Israeli investor, and that if he misled the public, no sanctions would be applied to him, and so it was important to ensure that Israeli investors would not be compelled to sue foreign funds in the courts of the funds' countries of origin.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2014
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