Capital Market Supervision - Legislation
The activity of the various parties acting in the Israeli capital market is regulated mainly by the following laws:
The Securities Law, 1968
The Companies Law, 1999
The Joint Investment Trusts Law, 1994
The Regulation of Investment Advice and Investment Portfolio Management Law, 1995
The Israel Securities Authority, the Capital Markets, Insurance and Savings Authority (Ministry of Finance), the Supervisor of Banks (Bank of Israel) and the TASE supervise the entities operating in the securities market.
The TASE operates under a license granted by the Minister of Finance. The Israel Securities Authority supervises the TASE’s activity.
The TASE is a private, for profit company, limited in securities, with one type of shares. TASE members are banks and brokerage firms (non-banking member corporations). Trading is carried out between TASE members on behalf of their customers.
Supervision of the TASE under the Securities Law, 1968 (the “Law”)
The TASE holds a license, as required by law.
The Law stipulates various mechanisms that regulate the operation of the TASE, as follows:
A. Composition of the TASE Board of Directors
- The board of directors of a stock exchange includes a maximum of fifteen members and the majority of its members are independent directors.
- The Board of Directors includes at least three independent directors, appointed by the General Meeting, at the recommendation of the Search Committee.
- The Board of Directors elects one of its members to serve as its Chairman.
B. Obligation to Set up Rules and Obtain Their Approval Obligation to Set up Rules and Obtain Their Approval
The Law requires the TASE to set up rules, as a condition to receive its license. The Rules must be approved by the Minister of Finance and the Israel Securities Authority.
The TASE Board of Directors may amend the TASE Rules. The amendment requires the approval of the Israel Securities Authority, which notifies the Minister of Finance of the amendment. The change takes effect ten days after the date of delivery of the notice, unless the Minister of Finance announces his objection to the change before the end of the aforesaid period.
The TASE Rules and Regulations include guidelines concerning the following, among others: TASE members, listing securities, trading halts and maintenance rules, trading, publication of information by the TASE, and fees charged by the TASE.
C. Supervision by the Israel Securities Authority (ISA)
The Israel Securities Authority supervises the fair and proper management of the TASE, as well as the activity of the TASE Clearing House and MAOF (Derivatives) Clearing House.
D. Appellate Instance
Anyone considering themselves damaged by a TASE decision, excluding decisions in the course of trading on the TASE, or anyone considering themselves damaged by a decision to reject their application for TASE membership, may appeal at the Court.
E. Public Notification of TASE DecisionsPublic Notification of TASE Decisions
The TASE publishes its Rules and Regulations and any amendments thereto by means of deposit with the Companies Registrar. In addition, the TASE routinely publishes resolutions passed by the TASE Board of Directors regarding amendments of TASE Rules and Regulations on the TASE website.
Supervision of Entities Operating in the Capital Market
- TASE members that are banks are supervised by the Supervisor of the Banks at the Bank of Israel.
- The TASE supervises its members’ compliance with the principles set forth in the TASE Rules and the Regulations, through the Membership and Supervision Department.
- Mutual fund management entities are subject to the directives set forth in the Joint Investment Trusts Law, 1994.
- Entities engaged in portfolio management and investment consulting are subject to the directives set forth in the Regulation of Investment Advice and Investment Portfolio Management Law, 1995.
- Companies whose securities are listed on the TASE are subject to the directives set forth in the Securities Law and in its Regulations. Such companies are also subject to the directives set forth in the Companies Law, including directives related to their corporate governance, such as the obligation to appoint external directors, an audit committee and an internal auditor.
Capital Market Regulators
Israel Securities Authority (ISA)
Established pursuant to the Securities Law, 1968. The role of the ISA is to safeguard the interests of the investing public in securities.
Israel Securities Authority website >
Ministry of Finance
Bank of Israel
The Central Bank of the State of Israel, located in Jerusalem and operates under the Bank of Israel Law. The Bank manages monetary policy, holds and manages the country's foreign exchange reserves, regulates and supervises the banking system, provides banking services to the government, manages information and statistics on the Israeli economy, regulates the payment and settlement systems in the economy and issues the country's notes and coins. The Governor of the Bank is also defined by his position as economic advisor to the government.