ISRAEL Trends and Developments Contributed by: Ronen Vinograd, Vinograd & Co.
The ISA 24 Paper caused widespread disruption as market participants paused sales to reassess com - pliance. In September 2025, the ISA introduced its Investment Codex (“ISA Codex”), intended to reform investment distribution practices, it represents a fun - damental shift in the way investments are distributed in the Israeli market – with a particular focus on PEFs. However, ambiguity over its precise implications has left the market in a state of uncertainty. In parallel, the Capital Markets and Long-Term Sav - ings Authority (the “LTS Regulator”) proposed amend - ments in June 2025 prohibiting IRA investments in PEFs – effectively excluding alternative assets from IRAs. This stands in sharp contrast to global trends: in the US, recent reforms have expanded IRA investment options to include private equity and other alterna - tives. Thus, the Israeli PEF market now faces the paradox that misconduct has led to overly restrictive regula - tion. The future is now Despite the current regulatory turbulence, the mar - ket’s long-term trajectory appears positive. The les - sons of recent years have fostered greater sophistica - tion among both managers and investors. A second generation of PEFs, managed by more experienced sponsors and investing in advanced asset classes – such as real estate debt funds employing AI-driven underwriting, small-business lending platforms, and litigation finance – is emerging.
Looking ahead, there is reason for cautious optimism. In most OECD countries, investors with USD/EUR1 million in all investable assets (excluding their home) qualify for access to alternative investments. In Isra - el, the threshold remains much higher: ILS9.4 million (around USD2.8 million) in liquid assets only. I believe there will likely be a reform in 2026 that may lower this qualification threshold, aligning Israel with OECD standards. This would significantly broaden the eligible investor base, enhance fund quality, and deepen market maturity. While greed and aggressive marketing can never be fully eliminated, a more open and competitive environment would reduce the incen - tives for abusive practices and strengthen investor protection.
157 CHAMBERS.COM
Powered by FlippingBook