The Israel Securities Authority has passed an amendment proposal that would boost competition in the mutual fund market by allowing the distribution and sale of foreign mutual funds in Israel. "This represents a big step in our strategic goal to sophisticate the capital market in Israel," said Moshe Terry, chairman of the ISA on Sunday. "We are acting in an effort to build a legal framework, which allows the entry of new financial instruments." The amendment proposal to the current mutual fund law would allow investors in Israel to directly buy foreign funds in Israel, which are managed and listed abroad. Until now mutual funds that are listed abroad can be offered in Israel but only if they have local operations such as Israeli mutual funds. Therefore, investment by the Israeli public into foreign mutual funds has thus far been executed by banks. While the ISA regulates and inspects Israeli mutual funds, the regulator would not supervise foreign mutual funds, according to the amendment proposal. Instead, the ISA would rely on the existing supervision of the respective regulator of the place of origin of the foreign mutual fund. As proposed, the foreign mutual fund manager would be allowed to offer units of the fund to the Israeli public if the fund has the approval of the respective regulator, which for the time being will be the Financial Services Authority of the UK and the Securities and Exchange Commission of the US. The ISA added that not only US and UK mutual funds would be able to directly trade in Israel but also funds of other countries that have the regulatory approval of the FSA and the SEC to trade in the US and the UK. According to the proposal, foreign fund managers who are seeking to offer a fund to the Israeli public would need to appoint a representative in Israel who would act as a contact person to the investor public. The foreign mutual fund manager would need to have at least five funds under his management, which have been offered to the public in the fund's place of origin or a foreign country for a period of at least five years. Furthermore, a foreign mutual fund that seeks to offer units of the fund in Israel must have had a minimum value of $500 million total assets under its management for prior two years before making the request to trade in Israel. The amendment proposal to the mutual fund law requires the approval of the Finance Ministry and the Knesset Finance Committee.