In Israel it might become easier to get non-bank funding, especially for small-to-midsized businesses.
A joint press release from the Bank of Israel, the Israel Securities Authority, the Ministry of Finance and the Israel Tax Authority outlined new strategies to remove obstacles to developing the securitzation market in Israel and improve efficiency and competitiveness in capital markets.
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These proposals would increase the supply of financial instruments to be traded on the stock exchange. Measures will be taken to increase funding sources for businesses in general, particularly those that are small to mid-sized. At the same time, lessons from the financial crisis of 2008 will be taken into account.
One resolution is to improve risk-assessment and to reduce funding costs. This would allow various capital market entities to better manage assets. At the same time, the range of credit sources for small-to-mid-sized businesses will be increased.
To make these changes securely, there will be provisions to require the entity which is selling the right to receive cash flows from the defined assets to retain 10% of the securitized portfolio. Securitized transactions will be treated as sales and not as loans, in some cases, and there will be neutral taxation of the securitzation, which will not create additional burden or incentive. Increased transparency and details of the rights of borrowers will be included in these plans.