“When I became chairwoman of the Israel Securities Authority in 2018,” says Anat Guetta, “I arrived with a clear understanding as to the direction that we wanted to take.” Guetta and her team had analyzed other successful regulatory organizations in the world and found that the policy of the regulators in the world’s most successful markets emphasized the strengthening of the local economy. “For example,” explains Guetta, “the responsibility of the Financial Conduct Authority in England includes the bolstering of the economy of the United Kingdom. In Israel, by comparison, the law defines that the mandate of the Israel Securities Authority is to protect the interests of investors in the capital market.”
Guetta interpreted the ISA’s mandate broadly - to defend the interests of investors together with developing Israel’s economy, and she has linked the two. “In recent years, we have combined oversight of the securities laws together with developing and initiating projects in the market in Israel,” she says. Guetta notes that in today’s digitized global market, investors can invest anywhere in the world, and if they decide that the Israeli market is not enticing enough, they will go elsewhere. “In the last decade,” she points out, “almost 100% of Israeli technology companies did not raise capital in Israel, but instead raised funds from outside Israel, primarily in American markets and other foreign markets, at the expense of our market. Therefore, I saw the overall benefit of having our market developed and becoming attractive for companies and investors.”
Guetta says, “we see 2020 as a tipping point for the raising of capital on the local exchange, and during corona, we accomplished one of our strategic goals of joining the Israeli capital market to Israeli hi-tech.”
The role of the hi-tech industry has become much more important on the Tel Aviv Stock Exchange, says Guetta. In the past, she explains, the Exchange was primarily for the real estate and financial markets, but today, the hi-tech industry is gradually pushing them aside. Guetta adds that there is greater involvement of Israeli investors in IPOs for these companies. She notes that foreign investors are becoming more interested in the capital market in Israel. “Soon, there will be 100 new companies on the exchange, making a total of 540 companies listed.”
Israel has also changed specific technical procedures, making foreign investment more manageable. The ‘Dutch auction’ method of underwriting has now been replaced for the most part by the ‘book building’ format, which is much more accepted around the world. In addition, Israeli companies are no longer obligated to release company reports in Hebrew and may produce them in English only, which is more advantageous for foreign investors. Additionally, report formats have been changed from PDF format to the IXDRL format, the accepted format used in the United States and Europe.
Guetta points out that while Israel is today considered a power in the fintech industry, with more than 800 companies in the field and an abundant number of ‘unicorns’ (privately held startups valued at more than $1 billion), very few fintech companies are operating in Israel itself. “The reason why there is so little fintech business here is twofold,” explains Guetta. “At one time, there was no regulation in Israel that fully explained the rights of fintech to work here. In addition, Israel is a small business model for the industry.” She explains that the Israel Securities Authority has been creating clear regulatory standards for fintech companies in Israel, and beginning in 2022, it will be granting licenses for fintech companies to operate in Israel. Guetta says that this will not only expand fintech activity here but will also cause banks to become more customer-friendly due to increased competition from fintech companies.
As head of the Israel Securities Authority, Anat Guetta is also working hard to create greater diversity among companies in Israel’s capital markets. “The subject of gender diversity has been close to my heart for many years,” she explains. “I decided to take this subject as something to personally promote since one of the things that regulators have is the ability to influence the market.” In the coming year, says Guetta, the ISA will continue its efforts to have more women appointed as directors of the organizations that it supervises and will remove obstacles that are connected to women becoming directors of public companies. “Many talented women can serve as company directors. We need a tailwind to push these processes forward and help them become realized,” she says.
This article is taken from The Jerusalem Post Annual Executive Magazine 2021-2022. To read the entire magazine, click here.
This article was written in cooperation with Anat Guetta