Conference Presentation, Panel
Financing Ideas: Reinventing Israel's Capital Markets
- The Israel Securities Authority plans to submit recommendations to promote R&D investment in public companies within the next two weeks, alongside a roadmap for the subsequent three years focusing on regulatory certainty, burden reduction, and market development.
- Authorities anticipate establishing local funding infrastructure for R&D companies, including liquidity mechanisms, crowdfunding, and potential tax incentives, to reduce reliance on foreign capital, though finalizing tax agreements is described as being nearly complete.
- A 10-year timeframe is projected to determine whether current regulatory reviews successfully establish a structured regulatory book, with expectations that the framework will evolve to align with global standards following the 2008-2009 crisis.
- The Israeli economy is forecast to outpace other Western economies in growth over the next three years, a trend expected to persist with high investment levels, whereas reducing investment incentives could jeopardize this economic success.
- Long-term projections indicate the economy will grow savings at an annual rate of 9% over the next 15 years, while capital markets are expected to more than double in size over the next 10 years due to demographic shifts.
- Regulatory changes under the Concentration Committee and Basel III implementation are anticipated to flatten pyramid structures, separate real and financial assets, and facilitate the sale of financial entities to enable deleveraging.
- Plans to create a high-tech financial innovation hub aim to foster sophisticated financial tools and a collaborative ecosystem, supported by training investments in financial engineering and derivatives.
- Proposals include providing tax breaks or subsidies to local companies purchasing from Israeli startups to ensure a viable domestic market, as well as addressing the structural lack of an OTC market for corporate bonds that currently limits accessibility compared to the US.
- Risks identified include the potential for "dodgy fringe investors" in debt settlements due to current voting rules, a "buy and forget" strategy by institutional investors hindering liquidity, and the failure of many companies to scale sufficiently for export without government intervention.
- The concentration of institutional investors is expected to continue preventing liquidity increases, while the regulatory process aims to transform Israel into a global capital markets player through consistent evolution.