Other services - Israel
Securities lending and borrowing
Israeli securities are not eligible for CBL's securities lending and borrowing programme.
Compliance
The U.S.A. asserts jurisdiction over transactions involving securities issued or held for custody in the U.S.A., even where the link between the transaction and the U.S.A. is quite attenuated. Some U.S. economic sanctions laws have extraterritorial effect and others impose or threaten third parties' actions with secondary boycotts, which may affect the third parties' access to U.S. financial or other markets. U.S. financial institutions and, in some cases, their foreign-incorporated subsidiaries and affiliates, are subject to U.S. regulations, even when operating outside the U.S.A. CBL intermediates transactions involving securities in which the U.S.A. is the jurisdiction of issuance or custody. CBL also engages U.S. financial institutions to provide custody, depository and other services in selected non-U.S. jurisdictions based on the quality of the services offered and CBL’s other requirements. Such U.S.-owned or controlled institutions may be required to refuse or even block/freeze transactions directly or indirectly involving parties subject to U.S. economic sanctions regulations, regardless of the law of the jurisdiction in which the U.S. institution operates. CBL conducts its business to comply with all laws applicable to CBL. Accordingly, CBL may not be able to complete or may refuse or block/freeze transactions in or through a CBL account that, in CBL's judgment, may expose CBL to U.S. laws and regulations even where neither CBL nor the customer is directly subject to such laws, but where CBL’s chosen custodian or depository is subject to such laws.
Where a U.S.-linked institution serves as CBL’s custodian or depository, the customer acknowledges and accepts the obligation to comply and ensure compliance by any of the customer’s underlying clients, up to the ultimate [legal and] beneficial owner, with any U.S. law, regulation, sanction, order, judgment, injunction, asset freeze, blocking regulation or order or any other act or action of, or by, any national or foreign government, authority, court, (self-) regulatory organisation, government agency or instrumentality of government, including, but not limited to, investment and holding restrictions (“U.S. Regulations”) applicable to any of the customer, its underlying clients or CBL. The customer shall not hold or seek to hold CBL liable for actions by CBL’s chosen custodian or depository to comply with U.S. Regulations applicable to such custodian or depository. The customer shall not, by action or inaction, cause CBL to violate a U.S. Regulation and shall be liable for and hold CBL harmless against any direct or indirect loss, claim, damage, liability or expense, imposed on or incurred by or asserted against CBL in connection with any actual or alleged non-compliance with the aforesaid by the customer or any underlying client of such customer up to the ultimate [legal and] beneficial owner.
Please also refer to the Resource Center of the U.S. Department of the Treasury.
Disclosure requirements
Please refer to the Disclosure Requirements - Israel.
Investment restrictions
Customers are not allowed to hold Israeli financial instruments in CBL for underlying beneficial owners who are residents of Israel for tax purposes. The only exception is for CBL customers that are Israeli financial institutions acting as intermediaries.
In order to be allowed to hold Israeli securities, customers must provide an “Israeli Securities - One-time Certificate” certifying that none of the final beneficial owners is an Israeli resident for tax purposes. For customers who are Israeli financial institutions acting as intermediaries, an Israeli Securities - One-Time Certificate for Israeli financial institutions acting as intermediaries has to be provided to confirm that they are tax withholding agents and that they comply with the relevant Israeli tax withholding and reporting requirements.
For further information, please refer to the Israel tax area.
With regard to settlement and custody services for Clearstream customers, Israeli laws and regulations (including, without limitation, the Trading With The Enemy Ordinance (1939) as amended) stipulate that an investor cannot hold domestic Israeli securities through Clearstream in either of the following circumstances:
- The customer is a resident of either Iran, Iraq, Lebanon, Libya, Syria or Yemen; or
- The customer is not resident in Iran, Iraq, Lebanon, Libya, Syria or Yemen but one or more of its underlying entities in the holding chain (in particular, but not limited to, the beneficial owner) is a resident of one of those countries.
It is the customer’s responsibility to put in place all necessary arrangements with respect to investment restrictions and the customer shall be liable for non-compliance.
Foreign exchange
Foreign exchange services for the Israeli Shekel are available to customers on a case-by-case basis, upon request.
To complete foreign exchange conversions for the Israeli Shekel, customers should contact CBL’s Treasury Desk directly via an authenticated communications medium.
Market-specific legal considerations
Upper-tier attachment
Under Israeli law, upper-tier attachment is not prohibited but the courts have it in their discretion to take into account the damage the order is likely to cause to the holder or to the public.
No statutory protection of finality of settlement for securities transaction at the CSD level
Under Israeli law, there is no statutory finality protection with respect to the settlement of the securities leg of a transaction on the CSD.
The principal provisions of Israeli insolvency law that might prompt an insolvency administrator or creditor, in an insolvency or similar proceeding, to challenge a securities transfer are Section 268 of the Companies Ordinance and Section 98 of the Bankruptcy Ordinance [New Version], 5740-1980 (as applied to companies under Section 355 of the Companies Ordinance).
Possible delay
With regard to Banking Ordinance 1941 (under which a bank, in a pre-insolvency stage and following the intervention of the Governor and the Supervisor of Banks at the Bank of Israel, can delay fulfilling its obligations for a period of up to 20 days), it is uncertain whether this could apply to a branch of a foreign bank.
If it did so apply, then, in the event of the insolvency of the depository, there might in practice be a delay in the recovery of securities.
Other market-specific considerations
Bank of Israel reporting of trades involving FX, T-bills and Government Bonds with less than one year until maturity
Clearstream does not support customers in filing Bank of Israel reporting requirements for investors as stipulated in Order 5771-2011. Reporting requirements have been introduced on investors that trade foreign exchange, T-bills and short-term government bonds. Short-term government bonds are defined as any bond that has less than one year until maturity.
For further information, customers should consult their broker, FX dealer or "Foreign Intermediary", as defined by the Order. Further information can also be found on the Bank of Israel's website:
https://www.boi.org.il/en/NewsAndPublications/LegislationAndRegulations/Pages/Derivatives.aspx
The following FAQ has also been issued by the BoI to accompany the Order:
https://www.boi.org.il/en/NewsAndPublications/LegislationAndRegulations/Documents/report_faqe[1].pdf
Tax services
Please refer to the Israel tax area.