Technology-Based Investment Services in Israel: The Regulatory Framework and the 2026 Amendment

Technology is reshaping the way investment advice, investment marketing, and portfolio management services are delivered. In Israel, these services are governed by a dedicated directive issued by the Israel Securities Authority (ISA), which adapts the requirements of the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (the “Advice Law”) to a digital environment.

Originally introduced in 2016, the directive applies to services such as algorithmic investment advice, digital portfolio management, investment “signals,” and social trading. A recent amendment, approved by the ISA plenum in February 2026 and published in April 2026, eases one of the operational requirements applicable to signals services.

Adapting the Regulatory Framework to Digital Services

The directive enables license holders to use technological means across different stages of the client relationship, including:

• conducting suitability questionnaires and entering into agreements online;
• using algorithms to determine investment policy and risk levels; and
• providing ongoing recommendations or portfolio-management services digitally.

The aim is to allow broader access to investment services while preserving the regulatory protections imposed under the Advice Law.

Signals and Social Trading

The directive also regulates two specific digital services:

Independent-trading advice (“signals”) involves personalized investment recommendations delivered digitally to clients who trade independently. The service does not include monitoring whether clients implement the recommendations and is therefore generally intended for clients with relevant financial knowledge and trading experience.

Social trading enables users to view and copy the portfolios or trades of other users. Depending on the platform’s functionality, this activity may constitute investment advice or, where trades are executed automatically, portfolio management.

Key Obligations for License Holders

The use of technology does not reduce a license holder’s regulatory responsibilities. Among other things, license holders must:

• understand the methodology underlying the algorithm or technological system they use;
• provide clients with a clear explanation of how the service operates;
• maintain appropriate human support and intervention where necessary;
• remain responsible for damage arising from the use of the technological service; and
• maintain appropriate governance, documentation, and recordkeeping.

In other words, technology changes the way the service is delivered, but not the underlying professional responsibility.

What Changed in 2026?

The 2026 amendment concerns signals services that allow clients to execute recommended transactions directly through the platform.

Previously, a platform providing this functionality was required to allow execution through more than one execution service provider.

The amendment removes this requirement, meaning that a signals service may now enable execution through a single provider.

This change may reduce operational and integration costs and provide greater flexibility for fintech and trading platforms offering combined signals and execution services.

Practical Implications

Advisers, portfolio managers, fintech companies, and online-trading platforms should consider whether the amendment affects their existing or planned service models.

In particular, affected entities should review:

• their execution architecture and whether a single-provider model is now appropriate;
• client disclosures and agreements;
• the classification of digital services and product features; and
• their broader compliance framework, including algorithm oversight, human support, liability, governance, and recordkeeping.

The amendment is targeted and does not change the broader regulatory obligations applicable to technology-based investment services.

Our firm advises license holders, fintech companies, and platform operators on the Advice Law and the ISA’s technology-based services framework, including algorithmic investment advice, signals services, social trading, licensing, product structuring, and ongoing regulatory compliance.

This update contains general information only and does not constitute legal advice or a substitute for legal advice.