Foreign funds from additional scholarships could double on TASE | Barnea Jaffa Lande & Co.

On February 22, Israel’s Ministry of Finance published a draft law for public comment to amend the regulations on joint investment trusts (offerings of units of foreign funds).

These regulations regulate the listing of foreign funds for trading on the stock exchange in Israel.

Short and closed list of funds

According to regulations, a foreign traded fund (mainly ETFs) can only be listed on the Tel Aviv Stock Exchange (TASE) if the foreign exchange where it is traded appears on the list of exchanges included in the second and third addenda. to securities law.

This list stems from the Dual Listing Agreement, which allows securities of companies traded on these approved stock exchanges to be listed for trading on the TASE.

The list was determined according to the following characteristics:

1. The law applicable to a particular foreign exchange.
2. The regulations governing the activities of the stock exchange.
3. The mode of control by the local regulatory authorities.

These many criteria have resulted in a relatively small list of approved exchanges.

However, it is not necessarily correct to rely on the dual listing scheme for listing foreign funds for trading purposes. It even creates problems. For example, some of the approved exchanges are not relevant to the foreign fund listing agreement, while exchanges suitable for the agreement are not included.

Expand criteria

The suggested rule change proposes, as part of the criteria for granting a permit to a foreign fund manager to offer the units of a foreign-traded fund to the public in Israel, to cease reviewing the funds under the current securities law closed list. . Instead, each scholarship will be reviewed individually based on various quantitative parameters:

1. Trading volume.
2. Number of funds traded.
3. Total value of assets in each exchange.
4. Characteristics of the applicable law.
5. Monitoring of this exchange.

If this amendment is passed, managers of foreign traded funds not listed on approved exchanges will be able to reconsider listing their funds for trading on the stock exchange in Israel.

Comments on the proposed change can be submitted until March 14, 2022.

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